Correlation Between PLATO GOLD and Hormel Foods
Can any of the company-specific risk be diversified away by investing in both PLATO GOLD and Hormel 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 PLATO GOLD and Hormel Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLATO GOLD P and Hormel Foods, you can compare the effects of market volatilities on PLATO GOLD and Hormel 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 PLATO GOLD with a short position of Hormel Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLATO GOLD and Hormel Foods.
Diversification Opportunities for PLATO GOLD and Hormel Foods
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PLATO and Hormel is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding PLATO GOLD P and Hormel Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hormel Foods and PLATO GOLD 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 PLATO GOLD P are associated (or correlated) with Hormel Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hormel Foods has no effect on the direction of PLATO GOLD i.e., PLATO GOLD and Hormel Foods go up and down completely randomly.
Pair Corralation between PLATO GOLD and Hormel Foods
Assuming the 90 days horizon PLATO GOLD P is expected to generate 16.26 times more return on investment than Hormel Foods. However, PLATO GOLD is 16.26 times more volatile than Hormel Foods. It trades about 0.11 of its potential returns per unit of risk. Hormel Foods is currently generating about -0.01 per unit of risk. If you would invest 0.35 in PLATO GOLD P on September 12, 2024 and sell it today you would earn a total of 0.65 from holding PLATO GOLD P or generate 185.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLATO GOLD P vs. Hormel Foods
Performance |
| Timeline |
| PLATO GOLD P |
| Hormel Foods |
PLATO GOLD and Hormel Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLATO GOLD and Hormel Foods
The main advantage of trading using opposite PLATO GOLD and Hormel Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLATO GOLD position performs unexpectedly, Hormel 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 Hormel Foods will offset losses from the drop in Hormel Foods' long position.| PLATO GOLD vs. Elmos Semiconductor SE | PLATO GOLD vs. ELMOS SEMICONDUCTOR | PLATO GOLD vs. National Beverage Corp | PLATO GOLD vs. CAL MAINE FOODS |
| Hormel Foods vs. Shenandoah Telecommunications | Hormel Foods vs. Iridium Communications | Hormel Foods vs. Ribbon Communications | Hormel Foods vs. Citic Telecom International |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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