Correlation Between Kraft Heinz and Associated British
Can any of the company-specific risk be diversified away by investing in both Kraft Heinz and Associated British 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 Kraft Heinz and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kraft Heinz Co and Associated British Foods, you can compare the effects of market volatilities on Kraft Heinz and Associated British 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 Kraft Heinz with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Heinz and Associated British.
Diversification Opportunities for Kraft Heinz and Associated British
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kraft and Associated is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and Kraft Heinz 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 Kraft Heinz Co are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and Associated British go up and down completely randomly.
Pair Corralation between Kraft Heinz and Associated British
Considering the 90-day investment horizon Kraft Heinz is expected to generate 5.02 times less return on investment than Associated British. But when comparing it to its historical volatility, Kraft Heinz Co is 1.51 times less risky than Associated British. It trades about 0.04 of its potential returns per unit of risk. Associated British Foods is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,331 in Associated British Foods on January 19, 2024 and sell it today you would earn a total of 1,735 from holding Associated British Foods or generate 130.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kraft Heinz Co vs. Associated British Foods
Performance |
| Timeline |
| Kraft Heinz |
| Associated British Foods |
Kraft Heinz and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kraft Heinz and Associated British
The main advantage of trading using opposite Kraft Heinz and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kraft Heinz position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Kraft Heinz vs. Central Garden Pet | Kraft Heinz vs. Central Garden Pet | Kraft Heinz vs. The A2 Milk | Kraft Heinz vs. Altavoz Entertainment |
| Associated British vs. Kellanova | Associated British vs. Lancaster Colony | Associated British vs. The A2 Milk | Associated British vs. Altavoz Entertainment |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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