Correlation Between Bunzl Plc and Hershey
Can any of the company-specific risk be diversified away by investing in both Bunzl Plc 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 Bunzl Plc and Hershey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunzl plc and Hershey Co, you can compare the effects of market volatilities on Bunzl Plc 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 Bunzl Plc with a short position of Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunzl Plc and Hershey.
Diversification Opportunities for Bunzl Plc and Hershey
Very poor diversification
The 3 months correlation between Bunzl and Hershey is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bunzl plc and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey and Bunzl Plc 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 Bunzl plc 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 Bunzl Plc i.e., Bunzl Plc and Hershey go up and down completely randomly.
Pair Corralation between Bunzl Plc and Hershey
Assuming the 90 days horizon Bunzl plc is expected to generate 0.28 times more return on investment than Hershey. However, Bunzl plc is 3.53 times less risky than Hershey. It trades about 0.2 of its potential returns per unit of risk. Hershey Co is currently generating about 0.02 per unit of risk. If you would invest 2,196 in Bunzl plc on September 13, 2024 and sell it today you would earn a total of 83.00 from holding Bunzl plc or generate 3.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bunzl plc vs. Hershey Co
Performance |
| Timeline |
| Bunzl plc |
| Hershey |
Bunzl Plc and Hershey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunzl Plc and Hershey
The main advantage of trading using opposite Bunzl Plc and Hershey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunzl Plc 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.| Bunzl Plc vs. HUMANA INC | Bunzl Plc vs. Barloworld Ltd ADR | Bunzl Plc vs. Morningstar Unconstrained Allocation | Bunzl Plc vs. Thrivent High Yield |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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