Correlation Between Hormel Foods and Tradegate

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Can any of the company-specific risk be diversified away by investing in both Hormel Foods and Tradegate 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 Tradegate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and Tradegate AG Wertpapierhandelsbank, you can compare the effects of market volatilities on Hormel Foods and Tradegate 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 Tradegate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and Tradegate.

Diversification Opportunities for Hormel Foods and Tradegate

HormelTradegateDiversified AwayHormelTradegateDiversified Away100%
0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between Hormel and Tradegate is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and Tradegate AG Wertpapierhandels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradegate AG Wertpap 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 Tradegate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradegate AG Wertpap has no effect on the direction of Hormel Foods i.e., Hormel Foods and Tradegate go up and down completely randomly.

Pair Corralation between Hormel Foods and Tradegate

Assuming the 90 days horizon Hormel Foods is expected to under-perform the Tradegate. In addition to that, Hormel Foods is 7.11 times more volatile than Tradegate AG Wertpapierhandelsbank. It trades about -0.3 of its total potential returns per unit of risk. Tradegate AG Wertpapierhandelsbank is currently generating about 0.0 per unit of volatility. If you would invest  8,750  in Tradegate AG Wertpapierhandelsbank on November 30, 2024 and sell it today you would earn a total of  0.00  from holding Tradegate AG Wertpapierhandelsbank or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Hormel Foods  vs.  Tradegate AG Wertpapierhandels

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15HO7 T2G
       Timeline  
Hormel Foods 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Hormel Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2728293031
Tradegate AG Wertpap 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Tradegate AG Wertpapierhandelsbank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tradegate is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb84.58585.58686.58787.58888.5

Hormel Foods and Tradegate Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.34-1.77-1.2-0.63-0.060.481.051.622.192.76 0.51.01.52.02.53.0
JavaScript chart by amCharts 3.21.15HO7 T2G
       Returns  

Pair Trading with Hormel Foods and Tradegate

The main advantage of trading using opposite Hormel Foods and Tradegate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods position performs unexpectedly, Tradegate 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 Tradegate will offset losses from the drop in Tradegate's long position.
The idea behind Hormel Foods and Tradegate AG Wertpapierhandelsbank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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