Correlation Between WH Group and McCormick Company
Can any of the company-specific risk be diversified away by investing in both WH Group and McCormick Company 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 WH Group and McCormick Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WH Group Ltd and McCormick Company Incorporated, you can compare the effects of market volatilities on WH Group and McCormick Company 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 WH Group with a short position of McCormick Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of WH Group and McCormick Company.
Diversification Opportunities for WH Group and McCormick Company
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WHGLY and McCormick is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding WH Group Ltd and McCormick Company Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McCormick rporated and WH 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 WH Group Ltd are associated (or correlated) with McCormick Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McCormick rporated has no effect on the direction of WH Group i.e., WH Group and McCormick Company go up and down completely randomly.
Pair Corralation between WH Group and McCormick Company
Assuming the 90 days horizon WH Group Ltd is expected to generate 1.94 times more return on investment than McCormick Company. However, WH Group is 1.94 times more volatile than McCormick Company Incorporated. It trades about 0.2 of its potential returns per unit of risk. McCormick Company Incorporated is currently generating about 0.0 per unit of risk. If you would invest 1,347 in WH Group Ltd on January 27, 2024 and sell it today you would earn a total of 127.00 from holding WH Group Ltd or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
WH Group Ltd vs. McCormick Company Incorporated
Performance |
| Timeline |
| WH Group |
| McCormick rporated |
WH Group and McCormick Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WH Group and McCormick Company
The main advantage of trading using opposite WH Group and McCormick Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WH Group position performs unexpectedly, McCormick Company 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 McCormick Company will offset losses from the drop in McCormick Company's long position.| WH Group vs. Kellanova | WH Group vs. Lancaster Colony | WH Group vs. The A2 Milk | WH Group vs. Artisan Consumer Goods |
| McCormick Company vs. ConAgra Foods | McCormick Company vs. Campbell Soup | McCormick Company vs. Kellanova | McCormick Company vs. General Mills |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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