Correlation Between Simply Good and McCormick Company
Can any of the company-specific risk be diversified away by investing in both Simply 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 Simply 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 Simply Good Foods and McCormick Company Incorporated, you can compare the effects of market volatilities on Simply 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 Simply Good with a short position of McCormick Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simply Good and McCormick Company.
Diversification Opportunities for Simply Good and McCormick Company
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Simply and McCormick is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Simply Good Foods and McCormick Company Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McCormick Company 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 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 Simply Good i.e., Simply Good and McCormick Company go up and down completely randomly.
Pair Corralation between Simply Good and McCormick Company
Given the investment horizon of 90 days Simply Good Foods is expected to generate 0.88 times more return on investment than McCormick Company. However, Simply Good Foods is 1.14 times less risky than McCormick Company. It trades about 0.01 of its potential returns per unit of risk. McCormick Company Incorporated is currently generating about 0.01 per unit of risk. If you would invest 3,847 in Simply Good Foods on August 27, 2024 and sell it today you would earn a total of 54.00 from holding Simply Good Foods or generate 1.4% 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. McCormick Company Incorporated
Performance |
| Timeline |
| Simply Good Foods |
| McCormick Company |
Simply Good and McCormick Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simply Good and McCormick Company
The main advantage of trading using opposite Simply Good and McCormick Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simply 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.| Simply Good vs. Post Holdings | Simply Good vs. Treehouse Foods | Simply Good vs. J J Snack | Simply Good vs. Central Garden Pet |
| McCormick Company vs. Central Garden Pet | McCormick Company vs. Natures Sunshine Products | McCormick Company vs. Seneca Foods Corp | McCormick Company vs. Central Garden Pet |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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