Correlation Between Hormel Foods and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both Hormel Foods and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and GEELY AUTOMOBILE, you can compare the effects of market volatilities on Hormel Foods and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and GEELY AUTOMOBILE.
Diversification Opportunities for Hormel Foods and GEELY AUTOMOBILE
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hormel and GEELY is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEELY AUTOMOBILE has no effect on the direction of Hormel Foods i.e., Hormel Foods and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between Hormel Foods and GEELY AUTOMOBILE
Assuming the 90 days horizon Hormel Foods is expected to under-perform the GEELY AUTOMOBILE. But the stock apears to be less risky and, when comparing its historical volatility, Hormel Foods is 1.73 times less risky than GEELY AUTOMOBILE. The stock trades about -0.02 of its potential returns per unit of risk. The GEELY AUTOMOBILE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 94.00 in GEELY AUTOMOBILE on September 14, 2024 and sell it today you would earn a total of 101.00 from holding GEELY AUTOMOBILE or generate 107.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hormel Foods vs. GEELY AUTOMOBILE
Performance |
| Timeline |
| Hormel Foods |
| GEELY AUTOMOBILE |
Hormel Foods and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and GEELY AUTOMOBILE
The main advantage of trading using opposite Hormel Foods and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods position performs unexpectedly, GEELY AUTOMOBILE 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 GEELY AUTOMOBILE will offset losses from the drop in GEELY AUTOMOBILE's long position.| Hormel Foods vs. Guidewire Software | Hormel Foods vs. Carsales | Hormel Foods vs. GEELY AUTOMOBILE | Hormel Foods vs. NORTHEAST UTILITIES |
| GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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