Correlation Between Kraft Heinz and Microchip Technology

Can any of the company-specific risk be diversified away by investing in both Kraft Heinz and Microchip Technology 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 Microchip Technology 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 Microchip Technology, you can compare the effects of market volatilities on Kraft Heinz and Microchip Technology 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 Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Heinz and Microchip Technology.

Diversification Opportunities for Kraft Heinz and Microchip Technology

-0.25

Correlation Coefficient

Kraft Heinz  Microchip Technology

Very good diversification

The 3 months correlation between Kraft and Microchip is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Microchip Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and Microchip Technology go up and down completely randomly.

Pair Corralation between Kraft Heinz and Microchip Technology

Considering the 90-day investment horizon Kraft Heinz Co is expected to under-perform the Microchip Technology. But the stock apears to be less risky and, when comparing its historical volatility, Kraft Heinz Co is 2.0 times less risky than Microchip Technology. The stock trades about -0.02 of its potential returns per unit of risk. The Microchip Technology is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,741  in Microchip Technology on May 5, 2025 and sell it today you would earn a total of  1,895  from holding Microchip Technology or generate 39.97% return on investment over 90 days.

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

Kraft Heinz Co  vs.  Microchip Technology

Kraft Heinz

Risk-Adjusted Performance

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Microchip Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microchip Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical indicators, Microchip Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kraft Heinz and Microchip Technology

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

The idea behind Kraft Heinz Co and Microchip Technology 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.