Correlation Between Barry Callebaut and Rocky Mountain

Can any of the company-specific risk be diversified away by investing in both Barry Callebaut and Rocky Mountain 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 Barry Callebaut and Rocky Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barry Callebaut AG and Rocky Mountain Chocolate, you can compare the effects of market volatilities on Barry Callebaut and Rocky Mountain 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 Barry Callebaut with a short position of Rocky Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barry Callebaut and Rocky Mountain.

Diversification Opportunities for Barry Callebaut and Rocky Mountain

-0.61

Correlation Coefficient

Barry Callebaut  Rocky Mountain

Excellent diversification

The 3 months correlation between Barry and Rocky is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Barry Callebaut AG and Rocky Mountain Chocolate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Mountain Chocolate and Barry Callebaut 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 Barry Callebaut AG are associated (or correlated) with Rocky Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Mountain Chocolate has no effect on the direction of Barry Callebaut i.e., Barry Callebaut and Rocky Mountain go up and down completely randomly.

Pair Corralation between Barry Callebaut and Rocky Mountain

Assuming the 90 days horizon Barry Callebaut AG is expected to generate 0.86 times more return on investment than Rocky Mountain. However, Barry Callebaut AG is 1.17 times less risky than Rocky Mountain. It trades about -0.01 of its potential returns per unit of risk. Rocky Mountain Chocolate is currently generating about -0.03 per unit of risk. If you would invest  1,938  in Barry Callebaut AG on September 12, 2024 and sell it today you would lose (494.00) from holding Barry Callebaut AG or give up 25.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	82.98%
Values	Daily Returns

Barry Callebaut AG  vs.  Rocky Mountain Chocolate

Barry Callebaut AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barry Callebaut AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Rocky Mountain Chocolate

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rocky Mountain Chocolate are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Rocky Mountain reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barry Callebaut and Rocky Mountain

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

The idea behind Barry Callebaut AG and Rocky Mountain Chocolate 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.