Correlation Between Kraft Heinz and Archer Daniels
Can any of the company-specific risk be diversified away by investing in both Kraft Heinz and Archer Daniels 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 Kraft Heinz and Archer Daniels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kraft Heinz Co and Archer Daniels Midland, you can compare the effects of market volatilities on Kraft Heinz and Archer Daniels 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 Kraft Heinz with a short position of Archer Daniels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Heinz and Archer Daniels.
Diversification Opportunities for Kraft Heinz and Archer Daniels
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kraft and Archer is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Archer Daniels Midland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Daniels Midland and Kraft Heinz 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 Kraft Heinz Co are associated (or correlated) with Archer Daniels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Daniels Midland has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and Archer Daniels go up and down completely randomly.
Pair Corralation between Kraft Heinz and Archer Daniels
Considering the 90-day investment horizon Kraft Heinz Co is expected to under-perform the Archer Daniels. But the stock apears to be less risky and, when comparing its historical volatility, Kraft Heinz Co is 1.43 times less risky than Archer Daniels. The stock trades about -0.38 of its potential returns per unit of risk. The Archer Daniels Midland is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 5,671 in Archer Daniels Midland on August 27, 2024 and sell it today you would lose (358.00) from holding Archer Daniels Midland or give up 6.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kraft Heinz Co vs. Archer Daniels Midland
Performance |
| Timeline |
| Kraft Heinz |
| Archer Daniels Midland |
Kraft Heinz and Archer Daniels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kraft Heinz and Archer Daniels
The main advantage of trading using opposite Kraft Heinz and Archer Daniels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kraft Heinz position performs unexpectedly, Archer Daniels 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 Archer Daniels will offset losses from the drop in Archer Daniels' long position.| Kraft Heinz vs. General Mills | Kraft Heinz vs. Campbell Soup | Kraft Heinz vs. ConAgra Foods | Kraft Heinz vs. Hormel Foods |
| Archer Daniels vs. Adecoagro SA | Archer Daniels vs. Cal Maine Foods | Archer Daniels vs. Tyson Foods | Archer Daniels vs. Fresh Del Monte |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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