Correlation Between Kraft Heinz and Nestle SA
Can any of the company-specific risk be diversified away by investing in both Kraft Heinz and Nestle SA 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 Nestle SA 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 Nestle SA, you can compare the effects of market volatilities on Kraft Heinz and Nestle SA 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 Nestle SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Heinz and Nestle SA.
Diversification Opportunities for Kraft Heinz and Nestle SA
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kraft and Nestle is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Nestle SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestle SA 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 Nestle SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestle SA has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and Nestle SA go up and down completely randomly.
Pair Corralation between Kraft Heinz and Nestle SA
Considering the 90-day investment horizon Kraft Heinz Co is expected to generate 1.04 times more return on investment than Nestle SA. However, Kraft Heinz is 1.04 times more volatile than Nestle SA. It trades about -0.55 of its potential returns per unit of risk. Nestle SA is currently generating about -0.57 per unit of risk. If you would invest 3,550 in Kraft Heinz Co on August 24, 2024 and sell it today you would lose (441.00) from holding Kraft Heinz Co or give up 12.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kraft Heinz Co vs. Nestle SA
Performance |
| Timeline |
| Kraft Heinz |
| Nestle SA |
Kraft Heinz and Nestle SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kraft Heinz and Nestle SA
The main advantage of trading using opposite Kraft Heinz and Nestle SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kraft Heinz position performs unexpectedly, Nestle SA 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 Nestle SA will offset losses from the drop in Nestle SA's long position.| Kraft Heinz vs. General Mills | Kraft Heinz vs. Campbell Soup | Kraft Heinz vs. ConAgra Foods | Kraft Heinz vs. Hormel Foods |
| Nestle SA vs. General Mills | Nestle SA vs. Kellanova | Nestle SA vs. Campbell Soup | Nestle SA vs. Kraft Heinz Co |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |