Correlation Between McCormick Company and Associated British
Can any of the company-specific risk be diversified away by investing in both McCormick Company and Associated British 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 McCormick Company and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McCormick Company Incorporated and Associated British Foods, you can compare the effects of market volatilities on McCormick Company and Associated British 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 McCormick Company with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of McCormick Company and Associated British.
Diversification Opportunities for McCormick Company and Associated British
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between McCormick and Associated is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and McCormick Company 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 McCormick Company Incorporated are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of McCormick Company i.e., McCormick Company and Associated British go up and down completely randomly.
Pair Corralation between McCormick Company and Associated British
Considering the 90-day investment horizon McCormick Company Incorporated is expected to generate 0.95 times more return on investment than Associated British. However, McCormick Company Incorporated is 1.05 times less risky than Associated British. It trades about 0.13 of its potential returns per unit of risk. Associated British Foods is currently generating about 0.05 per unit of risk. If you would invest 7,695 in McCormick Company Incorporated on November 28, 2024 and sell it today you would earn a total of 306.00 from holding McCormick Company Incorporated or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
McCormick Company Incorporated vs. Associated British Foods
Performance |
| Timeline |
| McCormick Company |
| Associated British Foods |
McCormick Company and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McCormick Company and Associated British
The main advantage of trading using opposite McCormick Company and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McCormick Company position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| McCormick Company vs. ConAgra Foods | McCormick Company vs. Campbell Soup | McCormick Company vs. Kellanova | McCormick Company vs. General Mills |
| Associated British vs. Artisan Consumer Goods | Associated British vs. Altavoz Entertainment | Associated British vs. Avi Ltd ADR | Associated British vs. The a2 Milk |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |