Correlation Between Hormel Foods and Snowflake
Can any of the company-specific risk be diversified away by investing in both Hormel Foods and Snowflake 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 Snowflake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and Snowflake, you can compare the effects of market volatilities on Hormel Foods and Snowflake 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 Snowflake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and Snowflake.
Diversification Opportunities for Hormel Foods and Snowflake
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hormel and Snowflake is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and Snowflake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snowflake 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 Snowflake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snowflake has no effect on the direction of Hormel Foods i.e., Hormel Foods and Snowflake go up and down completely randomly.
Pair Corralation between Hormel Foods and Snowflake
Assuming the 90 days trading horizon Hormel Foods is expected to generate 0.58 times more return on investment than Snowflake. However, Hormel Foods is 1.73 times less risky than Snowflake. It trades about -0.16 of its potential returns per unit of risk. Snowflake is currently generating about -0.29 per unit of risk. If you would invest 19,456 in Hormel Foods on October 10, 2024 and sell it today you would lose (794.00) from holding Hormel Foods or give up 4.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hormel Foods vs. Snowflake
Performance |
| Timeline |
| Hormel Foods |
| Snowflake |
Hormel Foods and Snowflake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and Snowflake
The main advantage of trading using opposite Hormel Foods and Snowflake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods position performs unexpectedly, Snowflake 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 Snowflake will offset losses from the drop in Snowflake's long position.| Hormel Foods vs. salesforce inc | Hormel Foods vs. United Natural Foods, | Hormel Foods vs. CM Hospitalar SA | Hormel Foods vs. UnitedHealth Group Incorporated |
| Snowflake vs. Chunghwa Telecom Co, | Snowflake vs. CRISPR Therapeutics AG | Snowflake vs. Ameriprise Financial | Snowflake vs. Verizon Communications |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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