Correlation Between NYSE Composite and Hormel Foods
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Hormel 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 NYSE Composite and Hormel Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Hormel Foods, you can compare the effects of market volatilities on NYSE Composite and Hormel 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 NYSE Composite with a short position of Hormel Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Hormel Foods.
Diversification Opportunities for NYSE Composite and Hormel Foods
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Hormel is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Hormel Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hormel Foods and NYSE Composite 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 NYSE Composite are associated (or correlated) with Hormel Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hormel Foods has no effect on the direction of NYSE Composite i.e., NYSE Composite and Hormel Foods go up and down completely randomly.
Pair Corralation between NYSE Composite and Hormel Foods
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.48 times more return on investment than Hormel Foods. However, NYSE Composite is 2.06 times less risky than Hormel Foods. It trades about 0.08 of its potential returns per unit of risk. Hormel Foods is currently generating about -0.04 per unit of risk. If you would invest 1,532,846 in NYSE Composite on August 27, 2024 and sell it today you would earn a total of 479,499 from holding NYSE Composite or generate 31.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Hormel Foods
Performance |
| Timeline |
NYSE Composite and Hormel Foods Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Hormel Foods
Pair trading matchups for Hormel Foods
Pair Trading with NYSE Composite and Hormel Foods
The main advantage of trading using opposite NYSE Composite and Hormel Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Hormel 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 Hormel Foods will offset losses from the drop in Hormel Foods' long position.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| Hormel Foods vs. Bellring Brands LLC | Hormel Foods vs. Ingredion Incorporated | Hormel Foods vs. Nomad Foods | Hormel Foods 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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