Correlation Between Alstria Office and Hormel Foods
Can any of the company-specific risk be diversified away by investing in both Alstria Office 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 Alstria Office and Hormel Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between alstria office REIT AG and Hormel Foods, you can compare the effects of market volatilities on Alstria Office 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 Alstria Office with a short position of Hormel Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstria Office and Hormel Foods.
Diversification Opportunities for Alstria Office and Hormel Foods
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alstria and Hormel is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding alstria office REIT AG and Hormel Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hormel Foods and Alstria Office 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 alstria office REIT AG 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 Alstria Office i.e., Alstria Office and Hormel Foods go up and down completely randomly.
Pair Corralation between Alstria Office and Hormel Foods
Assuming the 90 days horizon alstria office REIT AG is expected to under-perform the Hormel Foods. In addition to that, Alstria Office is 6.28 times more volatile than Hormel Foods. It trades about -0.2 of its total potential returns per unit of risk. Hormel Foods is currently generating about -0.37 per unit of volatility. If you would invest 3,198 in Hormel Foods on October 12, 2024 and sell it today you would lose (226.00) from holding Hormel Foods or give up 7.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
alstria office REIT AG vs. Hormel Foods
Performance |
| Timeline |
| alstria office REIT |
| Hormel Foods |
Alstria Office and Hormel Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alstria Office and Hormel Foods
The main advantage of trading using opposite Alstria Office and Hormel Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alstria Office 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.| Alstria Office vs. Chengdu PUTIAN Telecommunications | Alstria Office vs. SK TELECOM TDADR | Alstria Office vs. Siemens Healthineers AG | Alstria Office vs. WESANA HEALTH HOLD |
| Hormel Foods vs. Materialise NV | Hormel Foods vs. Cleanaway Waste Management | Hormel Foods vs. THRACE PLASTICS | Hormel Foods vs. OFFICE DEPOT |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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