Correlation Between Campbell Soup and WH Group

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

By analyzing existing cross correlation between Campbell Soup and WH Group Limited, you can compare the effects of market volatilities on Campbell Soup and WH Group 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 WH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Campbell Soup and WH Group.

Diversification Opportunities for Campbell Soup and WH Group

-0.06

Correlation Coefficient

Campbell Soup  WH Group

Good diversification

The 3 months correlation between Campbell and WHGRF is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Campbell Soup and WH Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WH Group Limited 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 WH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WH Group Limited has no effect on the direction of Campbell Soup i.e., Campbell Soup and WH Group go up and down completely randomly.

Pair Corralation between Campbell Soup and WH Group

Considering the 90-day investment horizon Campbell Soup is expected to under-perform the WH Group. But the stock apears to be less risky and, when comparing its historical volatility, Campbell Soup is 2.75 times less risky than WH Group. The stock trades about -0.07 of its potential returns per unit of risk. The WH Group Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  81.00  in WH Group Limited on December 20, 2024 and sell it today you would earn a total of  5.00  from holding WH Group Limited or generate 6.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Campbell Soup  vs.  WH Group Limited

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 latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

WH Group Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WH Group Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, WH Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Campbell Soup and WH Group

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

The idea behind Campbell Soup and WH Group Limited 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.