Correlation Between Hilton Food and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both Hilton Food and Diageo PLC 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 Hilton Food and Diageo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Food Group and Diageo PLC, you can compare the effects of market volatilities on Hilton Food and Diageo PLC 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 Hilton Food with a short position of Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Food and Diageo PLC.
Diversification Opportunities for Hilton Food and Diageo PLC
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hilton and Diageo is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group and Diageo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC and Hilton Food 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 Hilton Food Group are associated (or correlated) with Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC has no effect on the direction of Hilton Food i.e., Hilton Food and Diageo PLC go up and down completely randomly.
Pair Corralation between Hilton Food and Diageo PLC
Assuming the 90 days trading horizon Hilton Food Group is expected to generate 1.06 times more return on investment than Diageo PLC. However, Hilton Food is 1.06 times more volatile than Diageo PLC. It trades about 0.1 of its potential returns per unit of risk. Diageo PLC is currently generating about -0.05 per unit of risk. If you would invest 87,570 in Hilton Food Group on September 13, 2024 and sell it today you would earn a total of 4,830 from holding Hilton Food Group or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilton Food Group vs. Diageo PLC
Performance |
| Timeline |
| Hilton Food Group |
| Diageo PLC |
Hilton Food and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Food and Diageo PLC
The main advantage of trading using opposite Hilton Food and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Food position performs unexpectedly, Diageo PLC 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| Hilton Food vs. MTI Wireless Edge | Hilton Food vs. AcadeMedia AB | Hilton Food vs. Fonix Mobile plc | Hilton Food vs. mobilezone holding AG |
| Diageo PLC vs. Hilton Food Group | Diageo PLC vs. Roebuck Food Group | Diageo PLC vs. Edita Food Industries | Diageo PLC vs. Broadcom |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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