Correlation Between Barry Callebaut and Hershey
Can any of the company-specific risk be diversified away by investing in both Barry Callebaut and Hershey 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 Barry Callebaut and Hershey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barry Callebaut AG and Hershey Co, you can compare the effects of market volatilities on Barry Callebaut and Hershey 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 Barry Callebaut with a short position of Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barry Callebaut and Hershey.
Diversification Opportunities for Barry Callebaut and Hershey
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barry and Hershey is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Barry Callebaut AG and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey and Barry Callebaut 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 Barry Callebaut AG are associated (or correlated) with Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of Barry Callebaut i.e., Barry Callebaut and Hershey go up and down completely randomly.
Pair Corralation between Barry Callebaut and Hershey
Assuming the 90 days horizon Barry Callebaut AG is expected to generate 1.61 times more return on investment than Hershey. However, Barry Callebaut is 1.61 times more volatile than Hershey Co. It trades about -0.25 of its potential returns per unit of risk. Hershey Co is currently generating about -0.44 per unit of risk. If you would invest 135,328 in Barry Callebaut AG on October 20, 2024 and sell it today you would lose (12,348) from holding Barry Callebaut AG or give up 9.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barry Callebaut AG vs. Hershey Co
Performance |
| Timeline |
| Barry Callebaut AG |
| Hershey |
Barry Callebaut and Hershey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barry Callebaut and Hershey
The main advantage of trading using opposite Barry Callebaut and Hershey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barry Callebaut position performs unexpectedly, Hershey 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 Hershey will offset losses from the drop in Hershey's long position.| Barry Callebaut vs. Hershey Co | Barry Callebaut vs. Mondelez International | Barry Callebaut vs. Chocoladefabriken Lindt Sprngli | Barry Callebaut vs. Bunzl plc |
| Hershey vs. Tootsie Roll Industries | Hershey vs. Rocky Mountain Chocolate | Hershey vs. Chocoladefabriken Lindt Sprngli | Hershey vs. Mondelez 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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