Correlation Between Chocoladefabriken and Hershey
Can any of the company-specific risk be diversified away by investing in both Chocoladefabriken 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 Chocoladefabriken and Hershey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chocoladefabriken Lindt Sprngli and Hershey Co, you can compare the effects of market volatilities on Chocoladefabriken 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 Chocoladefabriken with a short position of Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chocoladefabriken and Hershey.
Diversification Opportunities for Chocoladefabriken and Hershey
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chocoladefabriken and Hershey is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Sprngl and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey and Chocoladefabriken 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 Chocoladefabriken Lindt Sprngli 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 Chocoladefabriken i.e., Chocoladefabriken and Hershey go up and down completely randomly.
Pair Corralation between Chocoladefabriken and Hershey
Assuming the 90 days horizon Chocoladefabriken Lindt Sprngli is expected to generate 2.51 times more return on investment than Hershey. However, Chocoladefabriken is 2.51 times more volatile than Hershey Co. It trades about 0.01 of its potential returns per unit of risk. Hershey Co is currently generating about -0.06 per unit of risk. If you would invest 1,213 in Chocoladefabriken Lindt Sprngli on August 31, 2024 and sell it today you would lose (86.00) from holding Chocoladefabriken Lindt Sprngli or give up 7.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Chocoladefabriken Lindt Sprngl vs. Hershey Co
Performance |
| Timeline |
| Chocoladefabriken Lindt |
| Hershey |
Chocoladefabriken and Hershey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chocoladefabriken and Hershey
The main advantage of trading using opposite Chocoladefabriken and Hershey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chocoladefabriken 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.| Chocoladefabriken vs. Hershey Co | Chocoladefabriken vs. Mondelez International | Chocoladefabriken vs. Tootsie Roll Industries | Chocoladefabriken vs. Rocky Mountain Chocolate |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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