Correlation Between Campbell Soup and Preferred Commerce

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

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

Diversification Opportunities for Campbell Soup and Preferred Commerce

-0.87

Correlation Coefficient

Campbell Soup  Preferred Commerce

Pay attention - limited upside

The 3 months correlation between Campbell and Preferred is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Campbell Soup and Preferred Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preferred Commerce and Campbell Soup 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 Campbell Soup are associated (or correlated) with Preferred Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preferred Commerce has no effect on the direction of Campbell Soup i.e., Campbell Soup and Preferred Commerce go up and down completely randomly.

Pair Corralation between Campbell Soup and Preferred Commerce

Considering the 90-day investment horizon Campbell Soup is expected to under-perform the Preferred Commerce. But the stock apears to be less risky and, when comparing its historical volatility, Campbell Soup is 10.93 times less risky than Preferred Commerce. The stock trades about -0.27 of its potential returns per unit of risk. The Preferred Commerce is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Preferred Commerce on October 15, 2024 and sell it today you would earn a total of  354.00  from holding Preferred Commerce or generate 1770.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Campbell Soup  vs.  Preferred Commerce

Campbell Soup

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Campbell Soup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Preferred Commerce

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Preferred Commerce are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Preferred Commerce showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Campbell Soup and Preferred Commerce

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

The idea behind Campbell Soup and Preferred Commerce 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 Commodity Directory module to find actively traded commodities issued by global exchanges.