Correlation Between Hormel Foods and Westrock Coffee
Can any of the company-specific risk be diversified away by investing in both Hormel Foods and Westrock Coffee 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 Westrock Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and Westrock Coffee, you can compare the effects of market volatilities on Hormel Foods and Westrock Coffee 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 Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and Westrock Coffee.
Diversification Opportunities for Hormel Foods and Westrock Coffee
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hormel and Westrock is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee 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 Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Hormel Foods i.e., Hormel Foods and Westrock Coffee go up and down completely randomly.
Pair Corralation between Hormel Foods and Westrock Coffee
Considering the 90-day investment horizon Hormel Foods is expected to under-perform the Westrock Coffee. But the stock apears to be less risky and, when comparing its historical volatility, Hormel Foods is 2.06 times less risky than Westrock Coffee. The stock trades about -0.13 of its potential returns per unit of risk. The Westrock Coffee is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 625.00 in Westrock Coffee on November 30, 2024 and sell it today you would lose (12.00) from holding Westrock Coffee or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hormel Foods vs. Westrock Coffee
Performance |
| Timeline |
| Hormel Foods |
| Westrock Coffee |
Hormel Foods and Westrock Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and Westrock Coffee
The main advantage of trading using opposite Hormel Foods and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods position performs unexpectedly, Westrock Coffee 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 Westrock Coffee will offset losses from the drop in Westrock Coffee's long position.| Hormel Foods vs. Campbell Soup | Hormel Foods vs. General Mills | Hormel Foods vs. Kellanova | Hormel Foods vs. Lamb Weston Holdings |
| Westrock Coffee vs. Coffee Holding Co | Westrock Coffee vs. Bridgford Foods | Westrock Coffee vs. John B Sanfilippo | Westrock Coffee vs. Treehouse Foods |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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