Correlation Between Danone SA and Kraft Heinz
Can any of the company-specific risk be diversified away by investing in both Danone SA 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 Danone SA and Kraft Heinz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danone SA and Kraft Heinz Co, you can compare the effects of market volatilities on Danone SA 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 Danone SA with a short position of Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone SA and Kraft Heinz.
Diversification Opportunities for Danone SA and Kraft Heinz
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Danone and Kraft is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Danone SA and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz and Danone SA 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 Danone SA 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 Danone SA i.e., Danone SA and Kraft Heinz go up and down completely randomly.
Pair Corralation between Danone SA and Kraft Heinz
Assuming the 90 days horizon Danone SA is expected to generate 0.76 times more return on investment than Kraft Heinz. However, Danone SA is 1.32 times less risky than Kraft Heinz. It trades about 0.07 of its potential returns per unit of risk. Kraft Heinz Co is currently generating about -0.01 per unit of risk. If you would invest 5,968 in Danone SA on September 3, 2024 and sell it today you would earn a total of 482.00 from holding Danone SA or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danone SA vs. Kraft Heinz Co
Performance |
| Timeline |
| Danone SA |
| Kraft Heinz |
Danone SA and Kraft Heinz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danone SA and Kraft Heinz
The main advantage of trading using opposite Danone SA and Kraft Heinz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone SA 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.| Danone SA vs. RETAIL FOOD GROUP | Danone SA vs. CarsalesCom | Danone SA vs. National Retail Properties | Danone SA vs. Vastned Retail NV |
| Kraft Heinz vs. PSI Software AG | Kraft Heinz vs. CPU SOFTWAREHOUSE | Kraft Heinz vs. HEALTHCARE REAL A | Kraft Heinz vs. Magic Software Enterprises |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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