Correlation Between China Foods and McCormick Company
Can any of the company-specific risk be diversified away by investing in both China Foods and McCormick Company 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 China Foods and McCormick Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Foods Holdings and McCormick Company Incorporated, you can compare the effects of market volatilities on China Foods and McCormick Company 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 China Foods with a short position of McCormick Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Foods and McCormick Company.
Diversification Opportunities for China Foods and McCormick Company
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and McCormick is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Foods Holdings and McCormick Company Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McCormick Company and China 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 China Foods Holdings are associated (or correlated) with McCormick Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McCormick Company has no effect on the direction of China Foods i.e., China Foods and McCormick Company go up and down completely randomly.
Pair Corralation between China Foods and McCormick Company
Given the investment horizon of 90 days China Foods Holdings is expected to under-perform the McCormick Company. In addition to that, China Foods is 1.62 times more volatile than McCormick Company Incorporated. It trades about -0.05 of its total potential returns per unit of risk. McCormick Company Incorporated is currently generating about 0.0 per unit of volatility. If you would invest 8,280 in McCormick Company Incorporated on August 28, 2024 and sell it today you would lose (550.00) from holding McCormick Company Incorporated or give up 6.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
China Foods Holdings vs. McCormick Company Incorporated
Performance |
| Timeline |
| China Foods Holdings |
| McCormick Company |
China Foods and McCormick Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Foods and McCormick Company
The main advantage of trading using opposite China Foods and McCormick Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Foods position performs unexpectedly, McCormick Company 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 McCormick Company will offset losses from the drop in McCormick Company's long position.The idea behind China Foods Holdings and McCormick Company Incorporated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| McCormick Company vs. Central Garden Pet | McCormick Company vs. Natures Sunshine Products | McCormick Company vs. Seneca Foods Corp | McCormick Company vs. Central Garden Pet |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |