Correlation Between Apple and Kraft Heinz
Can any of the company-specific risk be diversified away by investing in both Apple and Kraft Heinz 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 Apple and Kraft Heinz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Kraft Heinz Co, you can compare the effects of market volatilities on Apple and Kraft Heinz 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 Apple with a short position of Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Kraft Heinz.
Diversification Opportunities for Apple and Kraft Heinz
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and Kraft is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz and Apple 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 Apple Inc are associated (or correlated) with Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of Apple i.e., Apple and Kraft Heinz go up and down completely randomly.
Pair Corralation between Apple and Kraft Heinz
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Kraft Heinz. In addition to that, Apple is 1.21 times more volatile than Kraft Heinz Co. It trades about -0.39 of its total potential returns per unit of risk. Kraft Heinz Co is currently generating about -0.18 per unit of volatility. If you would invest 3,046 in Kraft Heinz Co on October 23, 2024 and sell it today you would lose (119.00) from holding Kraft Heinz Co or give up 3.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Kraft Heinz Co
Performance |
| Timeline |
| Apple Inc |
| Kraft Heinz |
Apple and Kraft Heinz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Kraft Heinz
The main advantage of trading using opposite Apple and Kraft Heinz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Kraft Heinz 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 Kraft Heinz will offset losses from the drop in Kraft Heinz's long position.The idea behind Apple Inc and Kraft Heinz Co 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.| Kraft Heinz vs. General Mills | Kraft Heinz vs. Campbell Soup | Kraft Heinz vs. ConAgra Foods | Kraft Heinz vs. Hormel Foods |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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