Correlation Between Zebra Technologies and Hormel Foods
Can any of the company-specific risk be diversified away by investing in both Zebra Technologies 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 Zebra Technologies and Hormel Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zebra Technologies and Hormel Foods, you can compare the effects of market volatilities on Zebra Technologies 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 Zebra Technologies with a short position of Hormel Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zebra Technologies and Hormel Foods.
Diversification Opportunities for Zebra Technologies and Hormel Foods
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zebra and Hormel is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Zebra Technologies and Hormel Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hormel Foods and Zebra Technologies 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 Zebra Technologies 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 Zebra Technologies i.e., Zebra Technologies and Hormel Foods go up and down completely randomly.
Pair Corralation between Zebra Technologies and Hormel Foods
Assuming the 90 days trading horizon Zebra Technologies is expected to generate 0.61 times more return on investment than Hormel Foods. However, Zebra Technologies is 1.63 times less risky than Hormel Foods. It trades about -0.17 of its potential returns per unit of risk. Hormel Foods is currently generating about -0.18 per unit of risk. If you would invest 8,145 in Zebra Technologies on October 11, 2024 and sell it today you would lose (217.00) from holding Zebra Technologies or give up 2.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zebra Technologies vs. Hormel Foods
Performance |
| Timeline |
| Zebra Technologies |
| Hormel Foods |
Zebra Technologies and Hormel Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zebra Technologies and Hormel Foods
The main advantage of trading using opposite Zebra Technologies and Hormel Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zebra Technologies 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.| Zebra Technologies vs. Motorola Solutions | Zebra Technologies vs. Nokia Oyj | Zebra Technologies vs. Intelbras SA |
| Hormel Foods vs. Nordon Indstrias Metalrgicas | Hormel Foods vs. Align Technology | Hormel Foods vs. Zebra Technologies | Hormel Foods vs. GP Investments |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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