Correlation Between Real Good and McCormick Company
Can any of the company-specific risk be diversified away by investing in both Real Good 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 Real Good and McCormick Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Real Good Food and McCormick Company Incorporated, you can compare the effects of market volatilities on Real Good 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 Real Good with a short position of McCormick Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Good and McCormick Company.
Diversification Opportunities for Real Good and McCormick Company
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Real and McCormick is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Real Good Food and McCormick Company Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McCormick Company and Real Good 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 Real Good Food 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 Real Good i.e., Real Good and McCormick Company go up and down completely randomly.
Pair Corralation between Real Good and McCormick Company
Considering the 90-day investment horizon Real Good Food is expected to under-perform the McCormick Company. In addition to that, Real Good is 3.85 times more volatile than McCormick Company Incorporated. It trades about -0.18 of its total potential returns per unit of risk. McCormick Company Incorporated is currently generating about 0.0 per unit of volatility. If you would invest 7,798 in McCormick Company Incorporated on August 30, 2024 and sell it today you would lose (4.00) from holding McCormick Company Incorporated or give up 0.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Real Good Food vs. McCormick Company Incorporated
Performance |
| Timeline |
| Real Good Food |
| McCormick Company |
Real Good and McCormick Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Good and McCormick Company
The main advantage of trading using opposite Real Good and McCormick Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Good 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.| Real Good vs. Bunge Limited | Real Good vs. Cal Maine Foods | Real Good vs. Dole PLC | Real Good vs. Adecoagro SA |
| McCormick Company vs. Central Garden Pet | McCormick Company vs. Seneca Foods Corp | McCormick Company vs. Natures Sunshine Products | McCormick Company vs. Seneca Foods Corp |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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