Correlation Between Glanbia Plc and Campbell Soup

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

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

Diversification Opportunities for Glanbia Plc and Campbell Soup

0.27

Correlation Coefficient

Glanbia Plc  Campbell Soup

Modest diversification

The 3 months correlation between Glanbia and Campbell is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Glanbia plc and Campbell Soup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campbell Soup and Glanbia Plc 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 Glanbia plc 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 Glanbia Plc i.e., Glanbia Plc and Campbell Soup go up and down completely randomly.

Pair Corralation between Glanbia Plc and Campbell Soup

Assuming the 90 days horizon Glanbia plc is expected to under-perform the Campbell Soup. In addition to that, Glanbia Plc is 1.77 times more volatile than Campbell Soup. It trades about -0.1 of its total potential returns per unit of risk. Campbell Soup is currently generating about -0.02 per unit of volatility. If you would invest  4,103  in Campbell Soup on December 28, 2024 and sell it today you would lose (145.00) from holding Campbell Soup or give up 3.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

Glanbia plc  vs.  Campbell Soup

Glanbia plc

Risk-Adjusted Performance

Very Weak

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

The main advantage of trading using opposite Glanbia Plc and Campbell Soup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glanbia Plc 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 Glanbia plc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.