Correlation Between Nomad Foods and Kraft Heinz
Can any of the company-specific risk be diversified away by investing in both Nomad Foods and Kraft Heinz 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 Nomad Foods and Kraft Heinz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomad Foods and Kraft Heinz Co, you can compare the effects of market volatilities on Nomad Foods and Kraft Heinz 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 Nomad Foods with a short position of Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and Kraft Heinz.
Diversification Opportunities for Nomad Foods and Kraft Heinz
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nomad and Kraft is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz and Nomad Foods 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 Nomad Foods are associated (or correlated) with Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of Nomad Foods i.e., Nomad Foods and Kraft Heinz go up and down completely randomly.
Pair Corralation between Nomad Foods and Kraft Heinz
Given the investment horizon of 90 days Nomad Foods is expected to generate 1.37 times more return on investment than Kraft Heinz. However, Nomad Foods is 1.37 times more volatile than Kraft Heinz Co. It trades about 0.02 of its potential returns per unit of risk. Kraft Heinz Co is currently generating about -0.01 per unit of risk. If you would invest 1,709 in Nomad Foods on August 26, 2024 and sell it today you would earn a total of 68.00 from holding Nomad Foods or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomad Foods vs. Kraft Heinz Co
Performance |
| Timeline |
| Nomad Foods |
| Kraft Heinz |
Nomad Foods and Kraft Heinz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomad Foods and Kraft Heinz
The main advantage of trading using opposite Nomad Foods and Kraft Heinz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods position performs unexpectedly, Kraft Heinz 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 Kraft Heinz will offset losses from the drop in Kraft Heinz's long position.| Nomad Foods vs. Lancaster Colony | Nomad Foods vs. Treehouse Foods | Nomad Foods vs. John B Sanfilippo | Nomad Foods vs. Seneca Foods Corp |
| Kraft Heinz vs. Bellring Brands LLC | Kraft Heinz vs. Ingredion Incorporated | Kraft Heinz vs. Nomad Foods | Kraft Heinz vs. Post Holdings |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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