Correlation Between Bunge and Kraft Heinz

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

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

Diversification Opportunities for Bunge and Kraft Heinz

0.06

Correlation Coefficient

Bunge  Kraft Heinz

Significant diversification

The 3 months correlation between Bunge and Kraft is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz and Bunge 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 Bunge Limited 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 Bunge i.e., Bunge and Kraft Heinz go up and down completely randomly.

Pair Corralation between Bunge and Kraft Heinz

Allowing for the 90-day total investment horizon Bunge Limited is expected to under-perform the Kraft Heinz. In addition to that, Bunge is 1.02 times more volatile than Kraft Heinz Co. It trades about -0.03 of its total potential returns per unit of risk. Kraft Heinz Co is currently generating about -0.01 per unit of volatility. If you would invest  3,016  in Kraft Heinz Co on December 26, 2024 and sell it today you would lose (63.00) from holding Kraft Heinz Co or give up 2.09% of portfolio value over 90 days.

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

Bunge Limited  vs.  Kraft Heinz Co

Bunge Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bunge Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Bunge is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Bunge and Kraft Heinz

The main advantage of trading using opposite Bunge and Kraft Heinz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge 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.

The idea behind Bunge Limited and Kraft Heinz Co 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.