Correlation Between Hormel Foods and Steakholder Foods

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

Diversification Opportunities for Hormel Foods and Steakholder Foods

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Hormel and Steakholder is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and Steakholder Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steakholder 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 Steakholder Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steakholder Foods has no effect on the direction of Hormel Foods i.e., Hormel Foods and Steakholder Foods go up and down completely randomly.

Pair Corralation between Hormel Foods and Steakholder Foods

Considering the 90-day investment horizon Hormel Foods is expected to generate 0.4 times more return on investment than Steakholder Foods. However, Hormel Foods is 2.49 times less risky than Steakholder Foods. It trades about 0.02 of its potential returns per unit of risk. Steakholder Foods is currently generating about -0.08 per unit of risk. If you would invest  3,061  in Hormel Foods on September 5, 2024 and sell it today you would earn a total of  138.00  from holding Hormel Foods or generate 4.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Hormel Foods  vs.  Steakholder Foods

 Performance 
       Timeline  
Hormel Foods 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hormel Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Hormel Foods is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.
Steakholder Foods 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Steakholder Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Hormel Foods and Steakholder Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hormel Foods and Steakholder Foods

The main advantage of trading using opposite Hormel Foods and Steakholder Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods position performs unexpectedly, Steakholder Foods 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 Steakholder Foods will offset losses from the drop in Steakholder Foods' long position.
The idea behind Hormel Foods and Steakholder Foods 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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