Correlation Between Nestle SA and Kerry Group
Can any of the company-specific risk be diversified away by investing in both Nestle SA and Kerry Group 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 Kerry Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestle SA and Kerry Group plc, you can compare the effects of market volatilities on Nestle SA and Kerry Group 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 Kerry Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestle SA and Kerry Group.
Diversification Opportunities for Nestle SA and Kerry Group
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nestle and Kerry is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nestle SA and Kerry Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerry Group plc 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 Kerry Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerry Group plc has no effect on the direction of Nestle SA i.e., Nestle SA and Kerry Group go up and down completely randomly.
Pair Corralation between Nestle SA and Kerry Group
Assuming the 90 days horizon Nestle SA is expected to generate 1.31 times less return on investment than Kerry Group. But when comparing it to its historical volatility, Nestle SA is 1.53 times less risky than Kerry Group. It trades about 0.03 of its potential returns per unit of risk. Kerry Group plc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 8,750 in Kerry Group plc on January 26, 2024 and sell it today you would earn a total of 71.00 from holding Kerry Group plc or generate 0.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Nestle SA vs. Kerry Group plc
Performance |
Timeline |
Nestle SA |
Kerry Group plc |
Nestle SA and Kerry Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nestle SA and Kerry Group
The main advantage of trading using opposite Nestle SA and Kerry Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestle SA position performs unexpectedly, Kerry Group 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 Kerry Group will offset losses from the drop in Kerry Group's long position.Nestle SA vs. Kellanova | Nestle SA vs. Lancaster Colony | Nestle SA vs. The A2 Milk | Nestle SA vs. Artisan Consumer Goods |
Kerry Group vs. Kellanova | Kerry Group vs. Lancaster Colony | Kerry Group vs. The A2 Milk | Kerry Group vs. Artisan Consumer Goods |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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