Correlation Between House Of and Swift Foods

Can any of the company-specific risk be diversified away by investing in both House Of 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 House Of and Swift Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for House Of and Swift Foods

0.09

Correlation Coefficient

House Of  Swift Foods

Significant diversification

The 3 months correlation between House and Swift is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding House of Investments and Swift Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swift Foods and House Of 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 House of Investments 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 House Of i.e., House Of and Swift Foods go up and down completely randomly.

Pair Corralation between House Of and Swift Foods

Assuming the 90 days trading horizon House of Investments is expected to under-perform the Swift Foods. But the stock apears to be less risky and, when comparing its historical volatility, House of Investments is 4.85 times less risky than Swift Foods. The stock trades about -0.03 of its potential returns per unit of risk. The Swift Foods is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4.90  in Swift Foods on April 22, 2025 and sell it today you would earn a total of  0.10  from holding Swift Foods or generate 2.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	86.67%
Values	Daily Returns

House of Investments  vs.  Swift Foods

House of Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days House of Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, House Of is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Swift Foods

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Swift Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Swift Foods exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with House Of and Swift Foods

The main advantage of trading using opposite House Of and Swift Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if House Of 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.

The idea behind House of Investments and Swift 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.