Correlation Between Simply Good and Hormel Foods
Can any of the company-specific risk be diversified away by investing in both Simply Good 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 Simply Good and Hormel Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simply Good Foods and Hormel Foods, you can compare the effects of market volatilities on Simply Good 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 Simply Good with a short position of Hormel Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simply Good and Hormel Foods.
Diversification Opportunities for Simply Good and Hormel Foods
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Simply and Hormel is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Simply Good Foods and Hormel Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hormel Foods and Simply 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 Simply Good Foods 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 Simply Good i.e., Simply Good and Hormel Foods go up and down completely randomly.
Pair Corralation between Simply Good and Hormel Foods
Given the investment horizon of 90 days Simply Good Foods is expected to generate 1.11 times more return on investment than Hormel Foods. However, Simply Good is 1.11 times more volatile than Hormel Foods. It trades about 0.53 of its potential returns per unit of risk. Hormel Foods is currently generating about 0.14 per unit of risk. If you would invest 3,377 in Simply Good Foods on August 30, 2024 and sell it today you would earn a total of 615.00 from holding Simply Good Foods or generate 18.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simply Good Foods vs. Hormel Foods
Performance |
| Timeline |
| Simply Good Foods |
| Hormel Foods |
Simply Good and Hormel Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simply Good and Hormel Foods
The main advantage of trading using opposite Simply Good and Hormel Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simply Good 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.| Simply Good vs. Post Holdings | Simply Good vs. Treehouse Foods | Simply Good vs. J J Snack | Simply Good vs. Central Garden Pet |
| Hormel Foods vs. Campbell Soup | Hormel Foods vs. General Mills | Hormel Foods vs. Kellanova | Hormel Foods vs. Lamb Weston 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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