Correlation Between ConAgra Foods and Dole PLC

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

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

Diversification Opportunities for ConAgra Foods and Dole PLC

0.58

Correlation Coefficient

ConAgra Foods  Dole PLC

Very weak diversification

The 3 months correlation between ConAgra and Dole is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding ConAgra Foods and Dole PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dole PLC 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 Dole PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dole PLC has no effect on the direction of ConAgra Foods i.e., ConAgra Foods and Dole PLC go up and down completely randomly.

Pair Corralation between ConAgra Foods and Dole PLC

Considering the 90-day investment horizon ConAgra Foods is expected to under-perform the Dole PLC. But the stock apears to be less risky and, when comparing its historical volatility, ConAgra Foods is 1.33 times less risky than Dole PLC. The stock trades about -0.14 of its potential returns per unit of risk. The Dole PLC is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,604  in Dole PLC on September 4, 2024 and sell it today you would lose (94.00) from holding Dole PLC or give up 5.86% of portfolio value over 90 days.

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

ConAgra Foods  vs.  Dole PLC

ConAgra Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ConAgra Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Dole PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ConAgra Foods and Dole PLC

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

The idea behind ConAgra Foods and Dole PLC 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.