Correlation Between Premier Foods and McCormick Company
Can any of the company-specific risk be diversified away by investing in both Premier Foods and McCormick Company 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 Premier Foods and McCormick Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Foods Plc and McCormick Company Incorporated, you can compare the effects of market volatilities on Premier Foods and McCormick Company 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 Premier Foods with a short position of McCormick Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and McCormick Company.
Diversification Opportunities for Premier Foods and McCormick Company
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Premier and McCormick is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods Plc and McCormick Company Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McCormick Company and Premier 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 Premier Foods Plc are associated (or correlated) with McCormick Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McCormick Company has no effect on the direction of Premier Foods i.e., Premier Foods and McCormick Company go up and down completely randomly.
Pair Corralation between Premier Foods and McCormick Company
Assuming the 90 days horizon Premier Foods Plc is expected to under-perform the McCormick Company. But the pink sheet apears to be less risky and, when comparing its historical volatility, Premier Foods Plc is 1.14 times less risky than McCormick Company. The pink sheet trades about -0.21 of its potential returns per unit of risk. The McCormick Company Incorporated is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 7,794 in McCormick Company Incorporated on August 31, 2024 and sell it today you would lose (15.00) from holding McCormick Company Incorporated or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Foods Plc vs. McCormick Company Incorporated
Performance |
| Timeline |
| Premier Foods Plc |
| McCormick Company |
Premier Foods and McCormick Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and McCormick Company
The main advantage of trading using opposite Premier Foods and McCormick Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, McCormick Company 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 McCormick Company will offset losses from the drop in McCormick Company's long position.| Premier Foods vs. The A2 Milk | Premier Foods vs. Altavoz Entertainment | Premier Foods vs. Artisan Consumer Goods | Premier Foods vs. General Mills |
| McCormick Company vs. ConAgra Foods | McCormick Company vs. Campbell Soup | McCormick Company vs. Kellanova | McCormick Company vs. General Mills |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |