Correlation Between Investment Trust and Heritage Foods

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

By analyzing existing cross correlation between The Investment Trust and Heritage Foods Limited, you can compare the effects of market volatilities on Investment Trust and Heritage 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 Investment Trust with a short position of Heritage Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment Trust and Heritage Foods.

Diversification Opportunities for Investment Trust and Heritage Foods

0.52

Correlation Coefficient

Investment Trust  Heritage Foods

Very weak diversification

The 3 months correlation between Investment and Heritage is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding The Investment Trust and Heritage Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Foods and Investment Trust 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 The Investment Trust are associated (or correlated) with Heritage Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Foods has no effect on the direction of Investment Trust i.e., Investment Trust and Heritage Foods go up and down completely randomly.

Pair Corralation between Investment Trust and Heritage Foods

Assuming the 90 days trading horizon Investment Trust is expected to generate 1.04 times less return on investment than Heritage Foods. In addition to that, Investment Trust is 1.67 times more volatile than Heritage Foods Limited. It trades about 0.1 of its total potential returns per unit of risk. Heritage Foods Limited is currently generating about 0.16 per unit of volatility. If you would invest  39,700  in Heritage Foods Limited on April 4, 2025 and sell it today you would earn a total of  9,775  from holding Heritage Foods Limited or generate 24.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

The Investment Trust  vs.  Heritage Foods Limited

Investment Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Investment Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Investment Trust exhibited solid returns over the last few months and may actually be approaching a breakup point.

Heritage Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heritage Foods Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Heritage Foods reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Investment Trust and Heritage Foods

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

The idea behind The Investment Trust and Heritage Foods Limited 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.