Correlation Between Hershey and Bunzl Plc
Can any of the company-specific risk be diversified away by investing in both Hershey and Bunzl Plc 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 Bunzl Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hershey Co and Bunzl plc, you can compare the effects of market volatilities on Hershey and Bunzl Plc 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 Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hershey and Bunzl Plc.
Diversification Opportunities for Hershey and Bunzl Plc
Very poor diversification
The 3 months correlation between Hershey and Bunzl is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hershey Co and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc 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 Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of Hershey i.e., Hershey and Bunzl Plc go up and down completely randomly.
Pair Corralation between Hershey and Bunzl Plc
Considering the 90-day investment horizon Hershey Co is expected to under-perform the Bunzl Plc. In addition to that, Hershey is 2.58 times more volatile than Bunzl plc. It trades about -0.01 of its total potential returns per unit of risk. Bunzl plc is currently generating about -0.02 per unit of volatility. If you would invest 2,304 in Bunzl plc on September 13, 2024 and sell it today you would lose (25.00) from holding Bunzl plc or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Hershey Co vs. Bunzl plc
Performance |
| Timeline |
| Hershey |
| Bunzl plc |
Hershey and Bunzl Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hershey and Bunzl Plc
The main advantage of trading using opposite Hershey and Bunzl Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hershey position performs unexpectedly, Bunzl Plc 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 Bunzl Plc will offset losses from the drop in Bunzl Plc's long position.| Hershey vs. Tootsie Roll Industries | Hershey vs. Rocky Mountain Chocolate | Hershey vs. Chocoladefabriken Lindt Sprngli | Hershey vs. Mondelez International |
| Bunzl Plc vs. HUMANA INC | Bunzl Plc vs. Barloworld Ltd ADR | Bunzl Plc vs. Morningstar Unconstrained Allocation | Bunzl Plc vs. Thrivent High Yield |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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