Correlation Between Hormel Foods and High Liner
Can any of the company-specific risk be diversified away by investing in both Hormel Foods and High Liner 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 High Liner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and High Liner Foods, you can compare the effects of market volatilities on Hormel Foods and High Liner 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 High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and High Liner.
Diversification Opportunities for Hormel Foods and High Liner
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hormel and High is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods 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 High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of Hormel Foods i.e., Hormel Foods and High Liner go up and down completely randomly.
Pair Corralation between Hormel Foods and High Liner
Assuming the 90 days horizon Hormel Foods is expected to under-perform the High Liner. But the stock apears to be less risky and, when comparing its historical volatility, Hormel Foods is 2.39 times less risky than High Liner. The stock trades about -0.15 of its potential returns per unit of risk. The High Liner Foods is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,050 in High Liner Foods on November 4, 2024 and sell it today you would lose (20.00) from holding High Liner Foods or give up 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hormel Foods vs. High Liner Foods
Performance |
| Timeline |
| Hormel Foods |
| High Liner Foods |
Hormel Foods and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and High Liner
The main advantage of trading using opposite Hormel Foods and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| Hormel Foods vs. AGNC INVESTMENT | Hormel Foods vs. Apollo Investment Corp | Hormel Foods vs. AECOM TECHNOLOGY | Hormel Foods vs. Virtus Investment Partners |
| High Liner vs. Tencent Music Entertainment | High Liner vs. WisdomTree Investments | High Liner vs. BOS BETTER ONLINE | High Liner vs. SALESFORCE INC CDR |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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