Correlation Between Kerry Group and Mondelez International
Can any of the company-specific risk be diversified away by investing in both Kerry Group and Mondelez International 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 Kerry Group and Mondelez International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kerry Group plc and Mondelez International, you can compare the effects of market volatilities on Kerry Group and Mondelez International 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 Kerry Group with a short position of Mondelez International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerry Group and Mondelez International.
Diversification Opportunities for Kerry Group and Mondelez International
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kerry and Mondelez is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group plc and Mondelez International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondelez International and Kerry Group 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 Kerry Group plc are associated (or correlated) with Mondelez International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondelez International has no effect on the direction of Kerry Group i.e., Kerry Group and Mondelez International go up and down completely randomly.
Pair Corralation between Kerry Group and Mondelez International
Assuming the 90 days horizon Kerry Group plc is expected to generate 1.77 times more return on investment than Mondelez International. However, Kerry Group is 1.77 times more volatile than Mondelez International. It trades about 0.01 of its potential returns per unit of risk. Mondelez International is currently generating about 0.0 per unit of risk. If you would invest 8,763 in Kerry Group plc on September 14, 2024 and sell it today you would earn a total of 185.00 from holding Kerry Group plc or generate 2.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 76.11% |
| Values | Daily Returns |
Kerry Group plc vs. Mondelez International
Performance |
| Timeline |
| Kerry Group plc |
| Mondelez International |
Kerry Group and Mondelez International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kerry Group and Mondelez International
The main advantage of trading using opposite Kerry Group and Mondelez International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry Group position performs unexpectedly, Mondelez International 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 Mondelez International will offset losses from the drop in Mondelez International's long position.| Kerry Group vs. Kerry Group PLC | Kerry Group vs. Danone SA | Kerry Group vs. Carlsberg AS | Kerry Group vs. China Mengniu Dairy |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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