Correlation Between Hormel Foods and BG Foods

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

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

Diversification Opportunities for Hormel Foods and BG Foods

-0.21

Correlation Coefficient

Hormel Foods  BG Foods

Very good diversification

The 3 months correlation between Hormel and BGS is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods and Hormel Foods 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 Hormel Foods are associated (or correlated) with BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of Hormel Foods i.e., Hormel Foods and BG Foods go up and down completely randomly.

Pair Corralation between Hormel Foods and BG Foods

Considering the 90-day investment horizon Hormel Foods is expected to generate 0.28 times more return on investment than BG Foods. However, Hormel Foods is 3.55 times less risky than BG Foods. It trades about -0.03 of its potential returns per unit of risk. BG Foods is currently generating about -0.11 per unit of risk. If you would invest  2,887  in Hormel Foods on May 6, 2025 and sell it today you would lose (75.00) from holding Hormel Foods or give up 2.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hormel Foods  vs.  BG Foods

Hormel Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hormel Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Hormel Foods is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

BG Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days BG Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hormel Foods and BG Foods

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

The idea behind Hormel Foods and BG Foods 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.