Correlation Between Hershey and Barry Callebaut
Can any of the company-specific risk be diversified away by investing in both Hershey and Barry Callebaut 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 Barry Callebaut into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hershey Co and Barry Callebaut AG, you can compare the effects of market volatilities on Hershey and Barry Callebaut 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 Barry Callebaut. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hershey and Barry Callebaut.
Diversification Opportunities for Hershey and Barry Callebaut
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hershey and Barry is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hershey Co and Barry Callebaut AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barry Callebaut AG 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 Barry Callebaut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barry Callebaut AG has no effect on the direction of Hershey i.e., Hershey and Barry Callebaut go up and down completely randomly.
Pair Corralation between Hershey and Barry Callebaut
Considering the 90-day investment horizon Hershey Co is expected to generate 0.61 times more return on investment than Barry Callebaut. However, Hershey Co is 1.63 times less risky than Barry Callebaut. It trades about -0.07 of its potential returns per unit of risk. Barry Callebaut AG is currently generating about -0.25 per unit of risk. If you would invest 17,858 in Hershey Co on August 30, 2024 and sell it today you would lose (529.00) from holding Hershey Co or give up 2.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hershey Co vs. Barry Callebaut AG
Performance |
| Timeline |
| Hershey |
| Barry Callebaut AG |
Hershey and Barry Callebaut Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hershey and Barry Callebaut
The main advantage of trading using opposite Hershey and Barry Callebaut positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hershey position performs unexpectedly, Barry Callebaut 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 Barry Callebaut will offset losses from the drop in Barry Callebaut's long position.| Hershey vs. Tootsie Roll Industries | Hershey vs. Rocky Mountain Chocolate | Hershey vs. Chocoladefabriken Lindt Sprngli | Hershey vs. Mondelez International |
| Barry Callebaut vs. Hershey Co | Barry Callebaut vs. Mondelez International | Barry Callebaut vs. Nasdaq Inc | Barry Callebaut vs. Microsoft |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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