Correlation Between Campbell Soup and Farmer Bros
Can any of the company-specific risk be diversified away by investing in both Campbell Soup and Farmer Bros at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Campbell Soup and Farmer Bros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Campbell Soup and Farmer Bros Co, you can compare the effects of market volatilities on Campbell Soup and Farmer Bros and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Campbell Soup with a short position of Farmer Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Campbell Soup and Farmer Bros.
Diversification Opportunities for Campbell Soup and Farmer Bros
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Campbell and Farmer is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Campbell Soup and Farmer Bros Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmer Bros and Campbell Soup is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Campbell Soup are associated (or correlated) with Farmer Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmer Bros has no effect on the direction of Campbell Soup i.e., Campbell Soup and Farmer Bros go up and down completely randomly.
Pair Corralation between Campbell Soup and Farmer Bros
Considering the 90-day investment horizon Campbell Soup is expected to generate 0.61 times more return on investment than Farmer Bros. However, Campbell Soup is 1.64 times less risky than Farmer Bros. It trades about 0.01 of its potential returns per unit of risk. Farmer Bros Co is currently generating about -0.11 per unit of risk. If you would invest 4,321 in Campbell Soup on January 19, 2024 and sell it today you would earn a total of 10.00 from holding Campbell Soup or generate 0.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Campbell Soup vs. Farmer Bros Co
Performance |
Timeline |
Campbell Soup |
Farmer Bros |
Campbell Soup and Farmer Bros Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Campbell Soup and Farmer Bros
The main advantage of trading using opposite Campbell Soup and Farmer Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Campbell Soup position performs unexpectedly, Farmer Bros can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Farmer Bros will offset losses from the drop in Farmer Bros' long position.Campbell Soup vs. Central Garden Pet | Campbell Soup vs. Central Garden Pet | Campbell Soup vs. The A2 Milk | Campbell Soup vs. Altavoz Entertainment |
Farmer Bros vs. Central Garden Pet | Farmer Bros vs. Central Garden Pet | Farmer Bros vs. The A2 Milk | Farmer Bros vs. Altavoz Entertainment |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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