Correlation Between Central Garden and Kraft Heinz

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

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

Diversification Opportunities for Central Garden and Kraft Heinz

0.14

Correlation Coefficient

Central Garden  Kraft Heinz

Average diversification

The 3 months correlation between Central and Kraft is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz and Central Garden 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 Central Garden Pet 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 Central Garden i.e., Central Garden and Kraft Heinz go up and down completely randomly.

Pair Corralation between Central Garden and Kraft Heinz

Assuming the 90 days horizon Central Garden Pet is expected to under-perform the Kraft Heinz. In addition to that, Central Garden is 1.3 times more volatile than Kraft Heinz Co. It trades about -0.01 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  2,997  in Kraft Heinz Co on December 29, 2024 and sell it today you would earn a total of  10.00  from holding Kraft Heinz Co or generate 0.33% return on investment over 90 days.

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

Central Garden Pet  vs.  Kraft Heinz Co

Central Garden Pet

Risk-Adjusted Performance

Very Weak

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

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 Central Garden and Kraft Heinz

The main advantage of trading using opposite Central Garden and Kraft Heinz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Garden 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 Central Garden Pet 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.