Correlation Between ConAgra Foods and China Mengniu
Can any of the company-specific risk be diversified away by investing in both ConAgra Foods and China Mengniu 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 ConAgra Foods and China Mengniu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConAgra Foods and China Mengniu Dairy, you can compare the effects of market volatilities on ConAgra Foods and China Mengniu 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 ConAgra Foods with a short position of China Mengniu. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConAgra Foods and China Mengniu.
Diversification Opportunities for ConAgra Foods and China Mengniu
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ConAgra and China is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ConAgra Foods and China Mengniu Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mengniu Dairy and ConAgra Foods 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 ConAgra Foods are associated (or correlated) with China Mengniu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mengniu Dairy has no effect on the direction of ConAgra Foods i.e., ConAgra Foods and China Mengniu go up and down completely randomly.
Pair Corralation between ConAgra Foods and China Mengniu
Considering the 90-day investment horizon ConAgra Foods is expected to generate 0.67 times more return on investment than China Mengniu. However, ConAgra Foods is 1.5 times less risky than China Mengniu. It trades about -0.16 of its potential returns per unit of risk. China Mengniu Dairy is currently generating about -0.13 per unit of risk. If you would invest 2,729 in ConAgra Foods on November 3, 2024 and sell it today you would lose (140.00) from holding ConAgra Foods or give up 5.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ConAgra Foods vs. China Mengniu Dairy
Performance |
| Timeline |
| ConAgra Foods |
| China Mengniu Dairy |
ConAgra Foods and China Mengniu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConAgra Foods and China Mengniu
The main advantage of trading using opposite ConAgra Foods and China Mengniu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConAgra Foods position performs unexpectedly, China Mengniu 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 China Mengniu will offset losses from the drop in China Mengniu's long position.| ConAgra Foods vs. Kellanova | ConAgra Foods vs. General Mills | ConAgra Foods vs. JM Smucker | ConAgra Foods vs. Hormel Foods |
| China Mengniu vs. Nestle SA ADR | China Mengniu vs. ConAgra Foods | China Mengniu vs. Hormel Foods | China Mengniu vs. Kraft Heinz Co |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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