Correlation Between Laird Superfood and Associated British

Can any of the company-specific risk be diversified away by investing in both Laird Superfood and Associated British 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 Laird Superfood and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Laird Superfood and Associated British Foods, you can compare the effects of market volatilities on Laird Superfood and Associated British 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 Laird Superfood with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laird Superfood and Associated British.

Diversification Opportunities for Laird Superfood and Associated British

-0.84

Correlation Coefficient

Laird Superfood  Associated British

Pay attention - limited upside

The 3 months correlation between Laird and Associated is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Laird Superfood and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and Laird Superfood 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 Laird Superfood are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Laird Superfood i.e., Laird Superfood and Associated British go up and down completely randomly.

Pair Corralation between Laird Superfood and Associated British

Considering the 90-day investment horizon Laird Superfood is expected to under-perform the Associated British. In addition to that, Laird Superfood is 3.98 times more volatile than Associated British Foods. It trades about -0.11 of its total potential returns per unit of risk. Associated British Foods is currently generating about -0.22 per unit of volatility. If you would invest  3,025  in Associated British Foods on September 12, 2024 and sell it today you would lose (190.00) from holding Associated British Foods or give up 6.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Laird Superfood  vs.  Associated British Foods

Laird Superfood

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Laird Superfood are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Laird Superfood reported solid returns over the last few months and may actually be approaching a breakup point.

Associated British Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Associated British Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Laird Superfood and Associated British

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

The idea behind Laird Superfood and Associated British Foods 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.