Correlation Between Kerry Group and Pilgrims Pride
Can any of the company-specific risk be diversified away by investing in both Kerry Group and Pilgrims Pride 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 Kerry Group and Pilgrims Pride into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kerry Group plc and Pilgrims Pride Corp, you can compare the effects of market volatilities on Kerry Group and Pilgrims Pride 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 Kerry Group with a short position of Pilgrims Pride. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerry Group and Pilgrims Pride.
Diversification Opportunities for Kerry Group and Pilgrims Pride
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kerry and Pilgrims is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group plc and Pilgrims Pride Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pilgrims Pride Corp and Kerry Group 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 Kerry Group plc are associated (or correlated) with Pilgrims Pride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pilgrims Pride Corp has no effect on the direction of Kerry Group i.e., Kerry Group and Pilgrims Pride go up and down completely randomly.
Pair Corralation between Kerry Group and Pilgrims Pride
Assuming the 90 days horizon Kerry Group plc is expected to under-perform the Pilgrims Pride. In addition to that, Kerry Group is 1.22 times more volatile than Pilgrims Pride Corp. It trades about -0.03 of its total potential returns per unit of risk. Pilgrims Pride Corp is currently generating about 0.15 per unit of volatility. If you would invest 2,458 in Pilgrims Pride Corp on January 24, 2024 and sell it today you would earn a total of 1,141 from holding Pilgrims Pride Corp or generate 46.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kerry Group plc vs. Pilgrims Pride Corp
Performance |
| Timeline |
| Kerry Group plc |
| Pilgrims Pride Corp |
Kerry Group and Pilgrims Pride Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kerry Group and Pilgrims Pride
The main advantage of trading using opposite Kerry Group and Pilgrims Pride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry Group position performs unexpectedly, Pilgrims Pride 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 Pilgrims Pride will offset losses from the drop in Pilgrims Pride's long position.| Kerry Group vs. Kellanova | Kerry Group vs. Lancaster Colony | Kerry Group vs. The A2 Milk | Kerry Group vs. Artisan Consumer Goods |
| Pilgrims Pride vs. Bunge Limited | Pilgrims Pride vs. Archer Daniels Midland | Pilgrims Pride vs. Fresh Del Monte | Pilgrims Pride 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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