Correlation Between Post Holdings and ConAgra Foods
Can any of the company-specific risk be diversified away by investing in both Post Holdings 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 Post Holdings and ConAgra Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Post Holdings and ConAgra Foods, you can compare the effects of market volatilities on Post Holdings 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 Post Holdings with a short position of ConAgra Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Post Holdings and ConAgra Foods.
Diversification Opportunities for Post Holdings and ConAgra Foods
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Post and ConAgra is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Post Holdings and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods and Post Holdings 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 Post Holdings 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 Post Holdings i.e., Post Holdings and ConAgra Foods go up and down completely randomly.
Pair Corralation between Post Holdings and ConAgra Foods
Given the investment horizon of 90 days Post Holdings is expected to generate 1.2 times more return on investment than ConAgra Foods. However, Post Holdings is 1.2 times more volatile than ConAgra Foods. It trades about 0.23 of its potential returns per unit of risk. ConAgra Foods is currently generating about -0.26 per unit of risk. If you would invest 11,146 in Post Holdings on August 29, 2024 and sell it today you would earn a total of 789.00 from holding Post Holdings or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Post Holdings vs. ConAgra Foods
Performance |
| Timeline |
| Post Holdings |
| ConAgra Foods |
Post Holdings and ConAgra Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Post Holdings and ConAgra Foods
The main advantage of trading using opposite Post Holdings and ConAgra Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Post Holdings 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.| Post Holdings vs. Simply Good Foods | Post Holdings vs. Treehouse Foods | Post Holdings vs. J J Snack | Post Holdings vs. Central Garden Pet |
| ConAgra Foods vs. Kellanova | ConAgra Foods vs. General Mills | ConAgra Foods vs. JM Smucker | ConAgra Foods vs. Hormel 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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