Correlation Between Nestle SA and Campbell Soup
Can any of the company-specific risk be diversified away by investing in both Nestle SA and Campbell Soup 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 Nestle SA and Campbell Soup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestle SA and Campbell Soup, you can compare the effects of market volatilities on Nestle SA and Campbell Soup 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 Nestle SA with a short position of Campbell Soup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestle SA and Campbell Soup.
Diversification Opportunities for Nestle SA and Campbell Soup
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nestle and Campbell is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nestle SA and Campbell Soup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campbell Soup and Nestle SA 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 Nestle SA are associated (or correlated) with Campbell Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campbell Soup has no effect on the direction of Nestle SA i.e., Nestle SA and Campbell Soup go up and down completely randomly.
Pair Corralation between Nestle SA and Campbell Soup
Assuming the 90 days horizon Nestle SA is expected to under-perform the Campbell Soup. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nestle SA is 1.05 times less risky than Campbell Soup. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Campbell Soup is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 4,418 in Campbell Soup on January 17, 2024 and sell it today you would lose (149.00) from holding Campbell Soup or give up 3.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Nestle SA vs. Campbell Soup
Performance |
| Timeline |
| Nestle SA |
| Campbell Soup |
Nestle SA and Campbell Soup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nestle SA and Campbell Soup
The main advantage of trading using opposite Nestle SA and Campbell Soup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestle SA position performs unexpectedly, Campbell Soup 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 Campbell Soup will offset losses from the drop in Campbell Soup's long position.| Nestle SA vs. General Mills | Nestle SA vs. Kellanova | Nestle SA vs. Campbell Soup | Nestle SA vs. Kraft Heinz Co |
| Campbell Soup vs. Seneca Foods Corp | Campbell Soup vs. Central Garden Pet | Campbell Soup vs. Central Garden Pet | Campbell Soup vs. Aryzta AG PK |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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