Correlation Between Kraft Heinz and Cult Food

Can any of the company-specific risk be diversified away by investing in both Kraft Heinz and Cult Food 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 Cult Food 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 Cult Food Science, you can compare the effects of market volatilities on Kraft Heinz and Cult Food 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 Cult Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Heinz and Cult Food.

Diversification Opportunities for Kraft Heinz and Cult Food

0.37

Correlation Coefficient

Kraft Heinz  Cult Food

Weak diversification

The 3 months correlation between Kraft and Cult is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Cult Food Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cult Food Science 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 Cult Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cult Food Science has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and Cult Food go up and down completely randomly.

Pair Corralation between Kraft Heinz and Cult Food

Considering the 90-day investment horizon Kraft Heinz Co is expected to generate 0.16 times more return on investment than Cult Food. However, Kraft Heinz Co is 6.19 times less risky than Cult Food. It trades about -0.16 of its potential returns per unit of risk. Cult Food Science is currently generating about -0.04 per unit of risk. If you would invest  3,427  in Kraft Heinz Co on October 24, 2024 and sell it today you would lose (500.00) from holding Kraft Heinz Co or give up 14.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kraft Heinz Co  vs.  Cult Food Science

Kraft Heinz

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cult Food Science

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cult Food Science are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cult Food may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kraft Heinz and Cult Food

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

The idea behind Kraft Heinz Co and Cult Food Science 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.