Correlation Between Hershey and Bon Natural
Can any of the company-specific risk be diversified away by investing in both Hershey and Bon Natural 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 Hershey and Bon Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hershey Co and Bon Natural Life, you can compare the effects of market volatilities on Hershey and Bon Natural 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 Hershey with a short position of Bon Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hershey and Bon Natural.
Diversification Opportunities for Hershey and Bon Natural
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hershey and Bon is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hershey Co and Bon Natural Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bon Natural Life and Hershey 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 Hershey Co are associated (or correlated) with Bon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bon Natural Life has no effect on the direction of Hershey i.e., Hershey and Bon Natural go up and down completely randomly.
Pair Corralation between Hershey and Bon Natural
Considering the 90-day investment horizon Hershey Co is expected to under-perform the Bon Natural. But the stock apears to be less risky and, when comparing its historical volatility, Hershey Co is 2.98 times less risky than Bon Natural. The stock trades about -0.07 of its potential returns per unit of risk. The Bon Natural Life is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Bon Natural Life on August 30, 2024 and sell it today you would earn a total of 35.00 from holding Bon Natural Life or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hershey Co vs. Bon Natural Life
Performance |
| Timeline |
| Hershey |
| Bon Natural Life |
Hershey and Bon Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hershey and Bon Natural
The main advantage of trading using opposite Hershey and Bon Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hershey position performs unexpectedly, Bon Natural 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 Bon Natural will offset losses from the drop in Bon Natural's long position.| Hershey vs. Tootsie Roll Industries | Hershey vs. Rocky Mountain Chocolate | Hershey vs. Chocoladefabriken Lindt Sprngli | Hershey vs. Mondelez International |
| Bon Natural vs. Blue Star Foods | Bon Natural vs. Grand Havana | Bon Natural vs. Real Good Food | Bon Natural 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |