Correlation Between Hormel Foods and Ingredion Incorporated
Can any of the company-specific risk be diversified away by investing in both Hormel Foods and Ingredion Incorporated 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 Ingredion Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and Ingredion Incorporated, you can compare the effects of market volatilities on Hormel Foods and Ingredion Incorporated 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 Ingredion Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and Ingredion Incorporated.
Diversification Opportunities for Hormel Foods and Ingredion Incorporated
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hormel and Ingredion is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and Ingredion Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingredion Incorporated 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 Ingredion Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingredion Incorporated has no effect on the direction of Hormel Foods i.e., Hormel Foods and Ingredion Incorporated go up and down completely randomly.
Pair Corralation between Hormel Foods and Ingredion Incorporated
Considering the 90-day investment horizon Hormel Foods is expected to under-perform the Ingredion Incorporated. In addition to that, Hormel Foods is 1.62 times more volatile than Ingredion Incorporated. It trades about -0.09 of its total potential returns per unit of risk. Ingredion Incorporated is currently generating about 0.03 per unit of volatility. If you would invest 13,676 in Ingredion Incorporated on November 1, 2024 and sell it today you would earn a total of 60.00 from holding Ingredion Incorporated or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hormel Foods vs. Ingredion Incorporated
Performance |
| Timeline |
| Hormel Foods |
| Ingredion Incorporated |
Hormel Foods and Ingredion Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and Ingredion Incorporated
The main advantage of trading using opposite Hormel Foods and Ingredion Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods position performs unexpectedly, Ingredion Incorporated 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 Ingredion Incorporated will offset losses from the drop in Ingredion Incorporated's long position.| Hormel Foods vs. Campbell Soup | Hormel Foods vs. General Mills | Hormel Foods vs. Kellanova | Hormel Foods vs. Lamb Weston Holdings |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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