Correlation Between Hormel Foods and Visa
Can any of the company-specific risk be diversified away by investing in both Hormel Foods and Visa 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 Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and Visa Inc, you can compare the effects of market volatilities on Hormel Foods and Visa 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 Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and Visa.
Diversification Opportunities for Hormel Foods and Visa
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hormel and Visa is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of Hormel Foods i.e., Hormel Foods and Visa go up and down completely randomly.
Pair Corralation between Hormel Foods and Visa
Assuming the 90 days trading horizon Hormel Foods is expected to under-perform the Visa. But the stock apears to be less risky and, when comparing its historical volatility, Hormel Foods is 1.22 times less risky than Visa. The stock trades about -0.19 of its potential returns per unit of risk. The Visa Inc is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 9,498 in Visa Inc on October 12, 2024 and sell it today you would lose (163.00) from holding Visa Inc or give up 1.72% 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. Visa Inc
Performance |
| Timeline |
| Hormel Foods |
| Visa Inc |
Hormel Foods and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and Visa
The main advantage of trading using opposite Hormel Foods and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.| Hormel Foods vs. Chunghwa Telecom Co, | Hormel Foods vs. Zoom Video Communications | Hormel Foods vs. Marvell Technology | Hormel Foods vs. Seagate Technology Holdings |
| Visa vs. Telecomunicaes Brasileiras SA | Visa vs. Verizon Communications | Visa vs. Hormel Foods | Visa vs. Burlington Stores, |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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