Correlation Between Kraft Heinz and Hormel Foods
Can any of the company-specific risk be diversified away by investing in both Kraft Heinz and Hormel 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 Kraft Heinz and Hormel Foods 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 Hormel Foods, you can compare the effects of market volatilities on Kraft Heinz and Hormel 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 Kraft Heinz with a short position of Hormel Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Heinz and Hormel Foods.
Diversification Opportunities for Kraft Heinz and Hormel Foods
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kraft and Hormel is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Hormel Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hormel Foods 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 Hormel Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hormel Foods has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and Hormel Foods go up and down completely randomly.
Pair Corralation between Kraft Heinz and Hormel Foods
Considering the 90-day investment horizon Kraft Heinz Co is expected to under-perform the Hormel Foods. But the stock apears to be less risky and, when comparing its historical volatility, Kraft Heinz Co is 1.4 times less risky than Hormel Foods. The stock trades about -0.13 of its potential returns per unit of risk. The Hormel Foods is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,210 in Hormel Foods on August 28, 2024 and sell it today you would lose (67.00) from holding Hormel Foods or give up 2.09% 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. Hormel Foods
Performance |
| Timeline |
| Kraft Heinz |
| Hormel Foods |
Kraft Heinz and Hormel Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kraft Heinz and Hormel Foods
The main advantage of trading using opposite Kraft Heinz and Hormel Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kraft Heinz position performs unexpectedly, Hormel 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 Hormel Foods will offset losses from the drop in Hormel Foods' long position.| Kraft Heinz vs. General Mills | Kraft Heinz vs. Campbell Soup | Kraft Heinz vs. ConAgra Foods | Kraft Heinz vs. Hormel Foods |
| Hormel Foods vs. Campbell Soup | Hormel Foods vs. General Mills | Hormel Foods vs. Kellanova | Hormel Foods vs. Lamb Weston Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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