Correlation Between Tootsie Roll and ConAgra Foods
Can any of the company-specific risk be diversified away by investing in both Tootsie Roll and ConAgra Foods 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 Tootsie Roll and ConAgra Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tootsie Roll Industries and ConAgra Foods, you can compare the effects of market volatilities on Tootsie Roll and ConAgra Foods 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 Tootsie Roll with a short position of ConAgra Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tootsie Roll and ConAgra Foods.
Diversification Opportunities for Tootsie Roll and ConAgra Foods
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tootsie and ConAgra is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tootsie Roll Industries and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods and Tootsie Roll 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 Tootsie Roll Industries are associated (or correlated) with ConAgra Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConAgra Foods has no effect on the direction of Tootsie Roll i.e., Tootsie Roll and ConAgra Foods go up and down completely randomly.
Pair Corralation between Tootsie Roll and ConAgra Foods
Allowing for the 90-day total investment horizon Tootsie Roll Industries is expected to under-perform the ConAgra Foods. But the stock apears to be less risky and, when comparing its historical volatility, Tootsie Roll Industries is 1.36 times less risky than ConAgra Foods. The stock trades about -0.11 of its potential returns per unit of risk. The ConAgra Foods is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,778 in ConAgra Foods on February 8, 2024 and sell it today you would earn a total of 294.00 from holding ConAgra Foods or generate 10.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Tootsie Roll Industries vs. ConAgra Foods
Performance |
Timeline |
Tootsie Roll Industries |
ConAgra Foods |
Tootsie Roll and ConAgra Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tootsie Roll and ConAgra Foods
The main advantage of trading using opposite Tootsie Roll and ConAgra Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tootsie Roll position performs unexpectedly, ConAgra Foods 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 ConAgra Foods will offset losses from the drop in ConAgra Foods' long position.Tootsie Roll vs. Rocky Mountain Chocolate | Tootsie Roll vs. Chocoladefabriken Lindt Sprngli | Tootsie Roll vs. Barry Callebaut AG | Tootsie Roll vs. Tootsie Roll Industries |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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