Correlation Between Kraft Heinz and Beyond Meat

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

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

Diversification Opportunities for Kraft Heinz and Beyond Meat

-0.5

Correlation Coefficient

Kraft Heinz  Beyond Meat

Very good diversification

The 3 months correlation between Kraft and Beyond is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Beyond Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Meat and Kraft Heinz 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 Kraft Heinz Co are associated (or correlated) with Beyond Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Meat has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and Beyond Meat go up and down completely randomly.

Pair Corralation between Kraft Heinz and Beyond Meat

Considering the 90-day investment horizon Kraft Heinz Co is expected to generate 0.44 times more return on investment than Beyond Meat. However, Kraft Heinz Co is 2.26 times less risky than Beyond Meat. It trades about 0.01 of its potential returns per unit of risk. Beyond Meat is currently generating about -0.05 per unit of risk. If you would invest  2,997  in Kraft Heinz Co on December 28, 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kraft Heinz Co  vs.  Beyond Meat

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.

Beyond Meat

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beyond Meat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Kraft Heinz and Beyond Meat

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

The idea behind Kraft Heinz Co and Beyond Meat 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.