Correlation Between McCormick Company and ConAgra Foods
Can any of the company-specific risk be diversified away by investing in both McCormick Company and ConAgra Foods 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 ConAgra Foods 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 ConAgra Foods, you can compare the effects of market volatilities on McCormick Company and ConAgra Foods 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 ConAgra Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of McCormick Company and ConAgra Foods.
Diversification Opportunities for McCormick Company and ConAgra Foods
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between McCormick and ConAgra is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra 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 ConAgra Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConAgra Foods has no effect on the direction of McCormick Company i.e., McCormick Company and ConAgra Foods go up and down completely randomly.
Pair Corralation between McCormick Company and ConAgra Foods
Considering the 90-day investment horizon McCormick Company Incorporated is expected to generate 0.84 times more return on investment than ConAgra Foods. However, McCormick Company Incorporated is 1.19 times less risky than ConAgra Foods. It trades about 0.07 of its potential returns per unit of risk. ConAgra Foods is currently generating about -0.01 per unit of risk. If you would invest 6,993 in McCormick Company Incorporated on August 28, 2024 and sell it today you would earn a total of 735.00 from holding McCormick Company Incorporated or generate 10.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
McCormick Company Incorporated vs. ConAgra Foods
Performance |
| Timeline |
| McCormick Company |
| ConAgra Foods |
McCormick Company and ConAgra Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McCormick Company and ConAgra Foods
The main advantage of trading using opposite McCormick Company and ConAgra Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McCormick Company position performs unexpectedly, ConAgra Foods 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 ConAgra Foods will offset losses from the drop in ConAgra Foods' long position.| McCormick Company vs. ConAgra Foods | McCormick Company vs. Campbell Soup | McCormick Company vs. Kellanova | McCormick Company vs. General Mills |
| ConAgra Foods vs. Bellring Brands LLC | ConAgra Foods vs. Ingredion Incorporated | ConAgra Foods vs. Nomad Foods | ConAgra Foods vs. Simply Good Foods |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| 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 |