Correlation Between Kerry Group and Tate Lyle
Can any of the company-specific risk be diversified away by investing in both Kerry Group and Tate Lyle 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 Tate Lyle 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 Tate Lyle plc, you can compare the effects of market volatilities on Kerry Group and Tate Lyle 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 Tate Lyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerry Group and Tate Lyle.
Diversification Opportunities for Kerry Group and Tate Lyle
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kerry and Tate is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group PLC and Tate Lyle plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tate Lyle plc 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 Tate Lyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tate Lyle plc has no effect on the direction of Kerry Group i.e., Kerry Group and Tate Lyle go up and down completely randomly.
Pair Corralation between Kerry Group and Tate Lyle
Assuming the 90 days horizon Kerry Group PLC is expected to generate 1.96 times more return on investment than Tate Lyle. However, Kerry Group is 1.96 times more volatile than Tate Lyle plc. It trades about -0.04 of its potential returns per unit of risk. Tate Lyle plc is currently generating about -0.11 per unit of risk. If you would invest 8,736 in Kerry Group PLC on January 26, 2024 and sell it today you would lose (354.00) from holding Kerry Group PLC or give up 4.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Kerry Group PLC vs. Tate Lyle plc
Performance |
| Timeline |
| Kerry Group PLC |
| Tate Lyle plc |
Kerry Group and Tate Lyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kerry Group and Tate Lyle
The main advantage of trading using opposite Kerry Group and Tate Lyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry Group position performs unexpectedly, Tate Lyle 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 Tate Lyle will offset losses from the drop in Tate Lyle's long position.| Kerry Group vs. Kellanova | Kerry Group vs. Lancaster Colony | Kerry Group vs. The A2 Milk | Kerry Group vs. Artisan Consumer Goods |
| Tate Lyle vs. Marfrig Global Foods | Tate Lyle vs. BRF SA ADR | Tate Lyle vs. Pilgrims Pride Corp | Tate Lyle vs. John B Sanfilippo |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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