Correlation Between Hormel Foods and Campbell Soup
Can any of the company-specific risk be diversified away by investing in both Hormel Foods and Campbell Soup 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 Hormel Foods and Campbell Soup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and Campbell Soup, you can compare the effects of market volatilities on Hormel Foods and Campbell Soup 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 Hormel Foods with a short position of Campbell Soup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and Campbell Soup.
Diversification Opportunities for Hormel Foods and Campbell Soup
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hormel and Campbell is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and Campbell Soup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campbell Soup and Hormel Foods 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 Hormel Foods are associated (or correlated) with Campbell Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campbell Soup has no effect on the direction of Hormel Foods i.e., Hormel Foods and Campbell Soup go up and down completely randomly.
Pair Corralation between Hormel Foods and Campbell Soup
Considering the 90-day investment horizon Hormel Foods is expected to generate 1.22 times less return on investment than Campbell Soup. But when comparing it to its historical volatility, Hormel Foods is 1.31 times less risky than Campbell Soup. It trades about 0.21 of its potential returns per unit of risk. Campbell Soup is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,301 in Campbell Soup on January 25, 2024 and sell it today you would earn a total of 253.00 from holding Campbell Soup or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hormel Foods vs. Campbell Soup
Performance |
| Timeline |
| Hormel Foods |
| Campbell Soup |
Hormel Foods and Campbell Soup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and Campbell Soup
The main advantage of trading using opposite Hormel Foods and Campbell Soup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods position performs unexpectedly, Campbell Soup 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 Campbell Soup will offset losses from the drop in Campbell Soup's long position.| Hormel Foods vs. Campbell Soup | Hormel Foods vs. General Mills | Hormel Foods vs. Kellanova | Hormel Foods vs. Lamb Weston Holdings |
| Campbell Soup vs. General Mills | Campbell Soup vs. Hormel Foods | Campbell Soup vs. Kellanova | Campbell Soup 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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