Correlation Between Collins Foods and Fevertree Drinks

Can any of the company-specific risk be diversified away by investing in both Collins Foods and Fevertree Drinks 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 Collins Foods and Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Collins Foods Limited and Fevertree Drinks Plc, you can compare the effects of market volatilities on Collins Foods and Fevertree Drinks 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 Collins Foods with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Fevertree Drinks.

Diversification Opportunities for Collins Foods and Fevertree Drinks

-0.57

Correlation Coefficient

Collins Foods  Fevertree Drinks

Excellent diversification

The 3 months correlation between Collins and Fevertree is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods Limited and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks Plc and Collins Foods 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 Collins Foods Limited are associated (or correlated) with Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of Collins Foods i.e., Collins Foods and Fevertree Drinks go up and down completely randomly.

Pair Corralation between Collins Foods and Fevertree Drinks

Assuming the 90 days horizon Collins Foods Limited is expected to generate 0.72 times more return on investment than Fevertree Drinks. However, Collins Foods Limited is 1.4 times less risky than Fevertree Drinks. It trades about 0.14 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.02 per unit of risk. If you would invest  600.00  in Collins Foods Limited on September 1, 2025 and sell it today you would earn a total of  130.00  from holding Collins Foods Limited or generate 21.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

Collins Foods Limited  vs.  Fevertree Drinks Plc

Collins Foods Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Collins Foods Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Collins Foods reported solid returns over the last few months and may actually be approaching a breakup point.

Fevertree Drinks Plc

Risk-Adjusted Performance

Weakest

Over the last 90 days Fevertree Drinks Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fevertree Drinks is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Collins Foods and Fevertree Drinks

The main advantage of trading using opposite Collins Foods and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.

The idea behind Collins Foods Limited and Fevertree Drinks Plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.