Correlation Between ConAgra Foods and Campbell Soup

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

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

Diversification Opportunities for ConAgra Foods and Campbell Soup

0.79

Correlation Coefficient

ConAgra Foods  Campbell Soup

Poor diversification

The 3 months correlation between ConAgra and Campbell is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ConAgra Foods and Campbell Soup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campbell Soup and ConAgra 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 ConAgra Foods are associated (or correlated) with Campbell Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campbell Soup has no effect on the direction of ConAgra Foods i.e., ConAgra Foods and Campbell Soup go up and down completely randomly.

Pair Corralation between ConAgra Foods and Campbell Soup

Considering the 90-day investment horizon ConAgra Foods is expected to generate 0.96 times more return on investment than Campbell Soup. However, ConAgra Foods is 1.04 times less risky than Campbell Soup. It trades about -0.01 of its potential returns per unit of risk. Campbell Soup is currently generating about -0.02 per unit of risk. If you would invest  2,717  in ConAgra Foods on December 30, 2024 and sell it today you would lose (62.00) from holding ConAgra Foods or give up 2.28% of portfolio value over 90 days.

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

ConAgra Foods  vs.  Campbell Soup

ConAgra Foods

Risk-Adjusted Performance

Very Weak

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

Campbell Soup

Risk-Adjusted Performance

Very Weak

Over the last 90 days Campbell Soup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Campbell Soup is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ConAgra Foods and Campbell Soup

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

The idea behind ConAgra Foods and Campbell Soup 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 Transaction History module to view history of all your transactions and understand their impact on performance.