Correlation Between Mondelez International and Kerry Group
Can any of the company-specific risk be diversified away by investing in both Mondelez International and Kerry Group 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 Mondelez International and Kerry Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mondelez International and Kerry Group plc, you can compare the effects of market volatilities on Mondelez International and Kerry Group 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 Mondelez International with a short position of Kerry Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mondelez International and Kerry Group.
Diversification Opportunities for Mondelez International and Kerry Group
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mondelez and Kerry is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Mondelez International and Kerry Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerry Group plc and Mondelez International 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 Mondelez International are associated (or correlated) with Kerry Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerry Group plc has no effect on the direction of Mondelez International i.e., Mondelez International and Kerry Group go up and down completely randomly.
Pair Corralation between Mondelez International and Kerry Group
Given the investment horizon of 90 days Mondelez International is expected to generate 12.25 times less return on investment than Kerry Group. But when comparing it to its historical volatility, Mondelez International is 1.77 times less risky than Kerry Group. It trades about 0.0 of its potential returns per unit of risk. Kerry Group plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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 |
Mondelez International vs. Kerry Group plc
Performance |
| Timeline |
| Mondelez International |
| Kerry Group plc |
Mondelez International and Kerry Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mondelez International and Kerry Group
The main advantage of trading using opposite Mondelez International and Kerry Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mondelez International position performs unexpectedly, Kerry Group 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 Kerry Group will offset losses from the drop in Kerry Group's long position.The idea behind Mondelez International and Kerry Group plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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