Correlation Between Krispy Kreme and Maison Solutions
Can any of the company-specific risk be diversified away by investing in both Krispy Kreme and Maison Solutions 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 Krispy Kreme and Maison Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Krispy Kreme and Maison Solutions, you can compare the effects of market volatilities on Krispy Kreme and Maison Solutions 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 Krispy Kreme with a short position of Maison Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krispy Kreme and Maison Solutions.
Diversification Opportunities for Krispy Kreme and Maison Solutions
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Krispy and Maison is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Krispy Kreme and Maison Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maison Solutions and Krispy Kreme 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 Krispy Kreme are associated (or correlated) with Maison Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maison Solutions has no effect on the direction of Krispy Kreme i.e., Krispy Kreme and Maison Solutions go up and down completely randomly.
Pair Corralation between Krispy Kreme and Maison Solutions
Given the investment horizon of 90 days Krispy Kreme is expected to under-perform the Maison Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Krispy Kreme is 4.57 times less risky than Maison Solutions. The stock trades about -0.52 of its potential returns per unit of risk. The Maison Solutions is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 96.00 in Maison Solutions on September 26, 2024 and sell it today you would earn a total of 15.00 from holding Maison Solutions or generate 15.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Krispy Kreme vs. Maison Solutions
Performance |
Timeline |
Krispy Kreme |
Maison Solutions |
Krispy Kreme and Maison Solutions Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Krispy Kreme and Maison Solutions
The main advantage of trading using opposite Krispy Kreme and Maison Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krispy Kreme position performs unexpectedly, Maison Solutions 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 Maison Solutions will offset losses from the drop in Maison Solutions' long position.Krispy Kreme vs. Sendas Distribuidora SA | Krispy Kreme vs. Natural Grocers by | Krispy Kreme vs. Sprouts Farmers Market | Krispy Kreme vs. Albertsons Companies |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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