Correlation Between Hormel Foods and WH Group
Can any of the company-specific risk be diversified away by investing in both Hormel Foods and WH Group 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 WH Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and WH Group Ltd, you can compare the effects of market volatilities on Hormel Foods and WH Group 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 WH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and WH Group.
Diversification Opportunities for Hormel Foods and WH Group
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hormel and WHGLY is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and WH Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WH Group 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 WH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WH Group has no effect on the direction of Hormel Foods i.e., Hormel Foods and WH Group go up and down completely randomly.
Pair Corralation between Hormel Foods and WH Group
Considering the 90-day investment horizon Hormel Foods is expected to under-perform the WH Group. But the stock apears to be less risky and, when comparing its historical volatility, Hormel Foods is 1.16 times less risky than WH Group. The stock trades about -0.04 of its potential returns per unit of risk. The WH Group Ltd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,219 in WH Group Ltd on January 26, 2024 and sell it today you would earn a total of 269.00 from holding WH Group Ltd or generate 22.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Hormel Foods vs. WH Group Ltd
Performance |
| Timeline |
| Hormel Foods |
| WH Group |
Hormel Foods and WH Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and WH Group
The main advantage of trading using opposite Hormel Foods and WH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods position performs unexpectedly, WH Group 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 WH Group will offset losses from the drop in WH Group's long position.| Hormel Foods vs. Bit Origin | Hormel Foods vs. Laird SuperfoodInc | Hormel Foods vs. Arcadia Biosciences | Hormel Foods vs. Stryve Foods |
| WH Group vs. Kellanova | WH Group vs. Lancaster Colony | WH Group vs. The A2 Milk | WH Group vs. Artisan Consumer Goods |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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