Correlation Between RFM Corp and Swift Foods
Can any of the company-specific risk be diversified away by investing in both RFM Corp and Swift 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 RFM Corp and Swift Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RFM Corp and Swift Foods, you can compare the effects of market volatilities on RFM Corp and Swift 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 RFM Corp with a short position of Swift Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of RFM Corp and Swift Foods.
Diversification Opportunities for RFM Corp and Swift Foods
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RFM and Swift is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding RFM Corp and Swift Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swift Foods and RFM Corp 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 RFM Corp are associated (or correlated) with Swift Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swift Foods has no effect on the direction of RFM Corp i.e., RFM Corp and Swift Foods go up and down completely randomly.
Pair Corralation between RFM Corp and Swift Foods
Assuming the 90 days trading horizon RFM Corp is expected to under-perform the Swift Foods. But the stock apears to be less risky and, when comparing its historical volatility, RFM Corp is 4.38 times less risky than Swift Foods. The stock trades about -0.01 of its potential returns per unit of risk. The Swift Foods is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Swift Foods on September 24, 2024 and sell it today you would earn a total of 0.50 from holding Swift Foods or generate 10.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
RFM Corp vs. Swift Foods
Performance |
Timeline |
RFM Corp |
Swift Foods |
RFM Corp and Swift Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RFM Corp and Swift Foods
The main advantage of trading using opposite RFM Corp and Swift Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RFM Corp position performs unexpectedly, Swift 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 Swift Foods will offset losses from the drop in Swift Foods' long position.RFM Corp vs. Century Pacific Food | RFM Corp vs. Axelum Resources Corp | RFM Corp vs. Swift Foods | RFM Corp vs. DDMP REIT |
Swift Foods vs. Century Pacific Food | Swift Foods vs. RFM Corp | Swift Foods vs. Axelum Resources Corp | Swift Foods vs. DDMP REIT |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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