Correlation Between Kraft Heinz and Post Holdings

Can any of the company-specific risk be diversified away by investing in both Kraft Heinz and Post Holdings 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 Kraft Heinz and Post Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kraft Heinz Co and Post Holdings, you can compare the effects of market volatilities on Kraft Heinz and Post Holdings 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 Kraft Heinz with a short position of Post Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Heinz and Post Holdings.

Diversification Opportunities for Kraft Heinz and Post Holdings

0.05

Correlation Coefficient

Kraft Heinz  Post Holdings

Significant diversification

The 3 months correlation between Kraft and Post is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Post Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Post Holdings and Kraft Heinz 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 Kraft Heinz Co are associated (or correlated) with Post Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Post Holdings has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and Post Holdings go up and down completely randomly.

Pair Corralation between Kraft Heinz and Post Holdings

Considering the 90-day investment horizon Kraft Heinz Co is expected to generate 1.48 times more return on investment than Post Holdings. However, Kraft Heinz is 1.48 times more volatile than Post Holdings. It trades about 0.0 of its potential returns per unit of risk. Post Holdings is currently generating about -0.01 per unit of risk. If you would invest  3,606  in Kraft Heinz Co on February 8, 2024 and sell it today you would lose (25.00) from holding Kraft Heinz Co or give up 0.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Kraft Heinz Co  vs.  Post Holdings

Kraft Heinz

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kraft Heinz Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Kraft Heinz is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Post Holdings

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Post Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Post Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kraft Heinz and Post Holdings

The main advantage of trading using opposite Kraft Heinz and Post Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kraft Heinz position performs unexpectedly, Post Holdings 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 Post Holdings will offset losses from the drop in Post Holdings' long position.

The idea behind Kraft Heinz Co and Post Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..