Correlation Between Hormel Foods and Post Holdings
Can any of the company-specific risk be diversified away by investing in both Hormel Foods and Post Holdings 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 Post Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and Post Holdings, you can compare the effects of market volatilities on Hormel Foods and Post Holdings 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 Post Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and Post Holdings.
Diversification Opportunities for Hormel Foods and Post Holdings
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hormel and Post is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and Post Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Post Holdings 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 Post Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Post Holdings has no effect on the direction of Hormel Foods i.e., Hormel Foods and Post Holdings go up and down completely randomly.
Pair Corralation between Hormel Foods and Post Holdings
Considering the 90-day investment horizon Hormel Foods is expected to under-perform the Post Holdings. In addition to that, Hormel Foods is 1.35 times more volatile than Post Holdings. It trades about -0.1 of its total potential returns per unit of risk. Post Holdings is currently generating about -0.07 per unit of volatility. If you would invest 10,757 in Post Holdings on November 9, 2024 and sell it today you would lose (171.00) from holding Post Holdings or give up 1.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hormel Foods vs. Post Holdings
Performance |
| Timeline |
| Hormel Foods |
| Post Holdings |
Hormel Foods and Post Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and Post Holdings
The main advantage of trading using opposite Hormel Foods and Post Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods position performs unexpectedly, Post Holdings 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 Post Holdings will offset losses from the drop in Post Holdings' long position.| Hormel Foods vs. Campbell Soup | Hormel Foods vs. General Mills | Hormel Foods vs. Kellanova | Hormel Foods vs. Lamb Weston Holdings |
| Post Holdings vs. Simply Good Foods | Post Holdings vs. Treehouse Foods | Post Holdings vs. J J Snack | Post Holdings vs. Central Garden Pet |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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