Correlation Between Amazon and ConAgra Foods

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Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and ConAgra Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and ConAgra Foods, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of ConAgra Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and ConAgra Foods.

Diversification Opportunities for Amazon and ConAgra Foods

-0.74
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Amazon and ConAgra is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and ConAgra Foods go up and down completely randomly.

Pair Corralation between Amazon and ConAgra Foods

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the ConAgra Foods. In addition to that, Amazon is 2.64 times more volatile than ConAgra Foods. It trades about -0.02 of its total potential returns per unit of risk. ConAgra Foods is currently generating about 0.15 per unit of volatility. If you would invest  3,610  in ConAgra Foods on September 8, 2022 and sell it today you would earn a total of  146.00  from holding ConAgra Foods or generate 4.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  ConAgra Foods

 Performance (%) 
       Timeline  
Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

ConAgra Foods 
ConAgra Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in ConAgra Foods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, ConAgra Foods may actually be approaching a critical reversion point that can send shares even higher in January 2023.

ConAgra Price Channel

Amazon and ConAgra Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and ConAgra Foods

The main advantage of trading using opposite Amazon and ConAgra Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.
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The idea behind Amazon Inc and ConAgra 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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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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