Correlation Between McCormick Company and Farmmi
Can any of the company-specific risk be diversified away by investing in both McCormick Company and Farmmi 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 McCormick Company and Farmmi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McCormick Company Incorporated and Farmmi Inc, you can compare the effects of market volatilities on McCormick Company and Farmmi 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 McCormick Company with a short position of Farmmi. Check out your portfolio center. Please also check ongoing floating volatility patterns of McCormick Company and Farmmi.
Diversification Opportunities for McCormick Company and Farmmi
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between McCormick and Farmmi is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and Farmmi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmmi Inc and McCormick Company 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 McCormick Company Incorporated are associated (or correlated) with Farmmi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmmi Inc has no effect on the direction of McCormick Company i.e., McCormick Company and Farmmi go up and down completely randomly.
Pair Corralation between McCormick Company and Farmmi
Considering the 90-day investment horizon McCormick Company Incorporated is expected to generate 0.8 times more return on investment than Farmmi. However, McCormick Company Incorporated is 1.24 times less risky than Farmmi. It trades about 0.12 of its potential returns per unit of risk. Farmmi Inc is currently generating about -0.17 per unit of risk. If you would invest 6,835 in McCormick Company Incorporated on January 20, 2024 and sell it today you would earn a total of 435.00 from holding McCormick Company Incorporated or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McCormick Company Incorporated vs. Farmmi Inc
Performance |
| Timeline |
| McCormick rporated |
| Farmmi Inc |
McCormick Company and Farmmi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McCormick Company and Farmmi
The main advantage of trading using opposite McCormick Company and Farmmi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McCormick Company position performs unexpectedly, Farmmi 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 Farmmi will offset losses from the drop in Farmmi's long position.| McCormick Company vs. ConAgra Foods | McCormick Company vs. Campbell Soup | McCormick Company vs. Kellanova | McCormick Company vs. General Mills |
| Farmmi vs. Green Globe International | Farmmi vs. Greenlane Holdings | Farmmi vs. 22nd Century Group | Farmmi vs. 1606 Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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