Correlation Between JM Smucker and Kraft Heinz
Can any of the company-specific risk be diversified away by investing in both JM Smucker and Kraft Heinz 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 JM Smucker and Kraft Heinz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JM Smucker and Kraft Heinz Co, you can compare the effects of market volatilities on JM Smucker and Kraft Heinz 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 JM Smucker with a short position of Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of JM Smucker and Kraft Heinz.
Diversification Opportunities for JM Smucker and Kraft Heinz
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SJM and Kraft is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding JM Smucker and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz and JM Smucker 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 JM Smucker are associated (or correlated) with Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of JM Smucker i.e., JM Smucker and Kraft Heinz go up and down completely randomly.
Pair Corralation between JM Smucker and Kraft Heinz
Considering the 90-day investment horizon JM Smucker is expected to under-perform the Kraft Heinz. In addition to that, JM Smucker is 2.01 times more volatile than Kraft Heinz Co. It trades about -0.14 of its total potential returns per unit of risk. Kraft Heinz Co is currently generating about 0.33 per unit of volatility. If you would invest 3,618 in Kraft Heinz Co on January 24, 2024 and sell it today you would earn a total of 197.00 from holding Kraft Heinz Co or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
JM Smucker vs. Kraft Heinz Co
Performance |
| Timeline |
| JM Smucker |
| Kraft Heinz |
JM Smucker and Kraft Heinz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JM Smucker and Kraft Heinz
The main advantage of trading using opposite JM Smucker and Kraft Heinz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JM Smucker position performs unexpectedly, Kraft Heinz 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 Kraft Heinz will offset losses from the drop in Kraft Heinz's long position.| JM Smucker vs. Bunge Limited | JM Smucker vs. Archer Daniels Midland | JM Smucker vs. Fresh Del Monte | JM Smucker vs. Limoneira Co |
| Kraft Heinz vs. Bunge Limited | Kraft Heinz vs. Archer Daniels Midland | Kraft Heinz vs. Fresh Del Monte | Kraft Heinz 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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