Correlation Between Hormel Foods and ConocoPhillips
Can any of the company-specific risk be diversified away by investing in both Hormel Foods and ConocoPhillips 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 Hormel Foods and ConocoPhillips into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and ConocoPhillips, you can compare the effects of market volatilities on Hormel Foods and ConocoPhillips 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 Hormel Foods with a short position of ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and ConocoPhillips.
Diversification Opportunities for Hormel Foods and ConocoPhillips
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hormel and ConocoPhillips is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and Hormel 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 Hormel Foods are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Hormel Foods i.e., Hormel Foods and ConocoPhillips go up and down completely randomly.
Pair Corralation between Hormel Foods and ConocoPhillips
Assuming the 90 days trading horizon Hormel Foods is expected to under-perform the ConocoPhillips. But the stock apears to be less risky and, when comparing its historical volatility, Hormel Foods is 1.32 times less risky than ConocoPhillips. The stock trades about -0.18 of its potential returns per unit of risk. The ConocoPhillips is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 5,011 in ConocoPhillips on October 31, 2024 and sell it today you would lose (110.00) from holding ConocoPhillips or give up 2.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hormel Foods vs. ConocoPhillips
Performance |
| Timeline |
| Hormel Foods |
| ConocoPhillips |
Hormel Foods and ConocoPhillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and ConocoPhillips
The main advantage of trading using opposite Hormel Foods and ConocoPhillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods position performs unexpectedly, ConocoPhillips 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 ConocoPhillips will offset losses from the drop in ConocoPhillips' long position.| Hormel Foods vs. Taiwan Semiconductor Manufacturing | Hormel Foods vs. T Mobile | Hormel Foods vs. NXP Semiconductors NV | Hormel Foods vs. Charter Communications |
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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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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