Correlation Between Hershey and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both Hershey and Lifeway 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 Hershey and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hershey Co and Lifeway Foods, you can compare the effects of market volatilities on Hershey and Lifeway 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 Hershey with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hershey and Lifeway Foods.
Diversification Opportunities for Hershey and Lifeway Foods
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hershey and Lifeway is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Hershey Co and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods 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 Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of Hershey i.e., Hershey and Lifeway Foods go up and down completely randomly.
Pair Corralation between Hershey and Lifeway Foods
Considering the 90-day investment horizon Hershey Co is expected to generate 0.49 times more return on investment than Lifeway Foods. However, Hershey Co is 2.04 times less risky than Lifeway Foods. It trades about -0.07 of its potential returns per unit of risk. Lifeway Foods is currently generating about -0.1 per unit of risk. If you would invest 18,052 in Hershey Co on August 24, 2024 and sell it today you would lose (557.00) from holding Hershey Co or give up 3.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hershey Co vs. Lifeway Foods
Performance |
| Timeline |
| Hershey |
| Lifeway Foods |
Hershey and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hershey and Lifeway Foods
The main advantage of trading using opposite Hershey and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hershey position performs unexpectedly, Lifeway 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.| Hershey vs. Tootsie Roll Industries | Hershey vs. Rocky Mountain Chocolate | Hershey vs. Chocoladefabriken Lindt Sprngli | Hershey vs. Mondelez International |
| Lifeway Foods vs. Bellring Brands LLC | Lifeway Foods vs. Treehouse Foods | Lifeway Foods vs. Ingredion Incorporated | Lifeway Foods vs. JM Smucker |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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