Correlation Between Campbell Soup and ConAgra Foods
Can any of the company-specific risk be diversified away by investing in both Campbell Soup and ConAgra 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 Campbell Soup and ConAgra Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Campbell Soup and ConAgra Foods, you can compare the effects of market volatilities on Campbell Soup and ConAgra 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 Campbell Soup with a short position of ConAgra Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Campbell Soup and ConAgra Foods.
Diversification Opportunities for Campbell Soup and ConAgra Foods
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Campbell and ConAgra is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Campbell Soup and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods and Campbell Soup 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 Campbell Soup are associated (or correlated) with ConAgra Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConAgra Foods has no effect on the direction of Campbell Soup i.e., Campbell Soup and ConAgra Foods go up and down completely randomly.
Pair Corralation between Campbell Soup and ConAgra Foods
Considering the 90-day investment horizon Campbell Soup is expected to generate 1.4 times less return on investment than ConAgra Foods. But when comparing it to its historical volatility, Campbell Soup is 1.24 times less risky than ConAgra Foods. It trades about 0.18 of its potential returns per unit of risk. ConAgra Foods is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,909 in ConAgra Foods on January 24, 2024 and sell it today you would earn a total of 201.00 from holding ConAgra Foods or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Campbell Soup vs. ConAgra Foods
Performance |
| Timeline |
| Campbell Soup |
| ConAgra Foods |
Campbell Soup and ConAgra Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Campbell Soup and ConAgra Foods
The main advantage of trading using opposite Campbell Soup and ConAgra Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Campbell Soup position performs unexpectedly, ConAgra 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 ConAgra Foods will offset losses from the drop in ConAgra Foods' long position.| Campbell Soup vs. Bunge Limited | Campbell Soup vs. Archer Daniels Midland | Campbell Soup vs. Fresh Del Monte | Campbell Soup vs. Limoneira Co |
| ConAgra Foods vs. Bunge Limited | ConAgra Foods vs. Archer Daniels Midland | ConAgra Foods vs. Fresh Del Monte | ConAgra Foods vs. Limoneira Co |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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