Correlation Between Kraft Heinz and McCormick Company
Can any of the company-specific risk be diversified away by investing in both Kraft Heinz and McCormick Company 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 McCormick Company 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 McCormick Company Incorporated, you can compare the effects of market volatilities on Kraft Heinz and McCormick Company 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 McCormick Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Heinz and McCormick Company.
Diversification Opportunities for Kraft Heinz and McCormick Company
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kraft and McCormick is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and McCormick Company Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McCormick Company 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 McCormick Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McCormick Company has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and McCormick Company go up and down completely randomly.
Pair Corralation between Kraft Heinz and McCormick Company
Considering the 90-day investment horizon Kraft Heinz Co is expected to under-perform the McCormick Company. But the stock apears to be less risky and, when comparing its historical volatility, Kraft Heinz Co is 1.27 times less risky than McCormick Company. The stock trades about -0.02 of its potential returns per unit of risk. The McCormick Company Incorporated is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 8,054 in McCormick Company Incorporated on August 24, 2024 and sell it today you would lose (259.00) from holding McCormick Company Incorporated or give up 3.22% 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. McCormick Company Incorporated
Performance |
| Timeline |
| Kraft Heinz |
| McCormick Company |
Kraft Heinz and McCormick Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kraft Heinz and McCormick Company
The main advantage of trading using opposite Kraft Heinz and McCormick Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kraft Heinz position performs unexpectedly, McCormick Company 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 McCormick Company will offset losses from the drop in McCormick Company's long position.| Kraft Heinz vs. General Mills | Kraft Heinz vs. Campbell Soup | Kraft Heinz vs. ConAgra Foods | Kraft Heinz vs. Hormel Foods |
| McCormick Company vs. ConAgra Foods | McCormick Company vs. Campbell Soup | McCormick Company vs. Kellanova | McCormick Company vs. General Mills |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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