Correlation Between Hormel Foods and Calbee

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

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

Diversification Opportunities for Hormel Foods and Calbee

0.18

Correlation Coefficient

Hormel Foods  Calbee

Average diversification

The 3 months correlation between Hormel and Calbee is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and Calbee Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calbee Inc and Hormel 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 Hormel Foods are associated (or correlated) with Calbee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calbee Inc has no effect on the direction of Hormel Foods i.e., Hormel Foods and Calbee go up and down completely randomly.

Pair Corralation between Hormel Foods and Calbee

Considering the 90-day investment horizon Hormel Foods is expected to generate 0.56 times more return on investment than Calbee. However, Hormel Foods is 1.79 times less risky than Calbee. It trades about 0.22 of its potential returns per unit of risk. Calbee Inc is currently generating about 0.1 per unit of risk. If you would invest  2,973  in Hormel Foods on September 20, 2024 and sell it today you would earn a total of  185.50  from holding Hormel Foods or generate 6.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Hormel Foods  vs.  Calbee Inc

Hormel Foods

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Hormel Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Hormel Foods is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Calbee Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calbee Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hormel Foods and Calbee

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

The idea behind Hormel Foods and Calbee Inc 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.