Correlation Between Kraft Heinz and Lifeway Foods

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

Diversification Opportunities for Kraft Heinz and Lifeway Foods

0.39

Correlation Coefficient

Kraft Heinz  Lifeway Foods

Weak diversification

The 3 months correlation between Kraft and Lifeway is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods 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 Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and Lifeway Foods go up and down completely randomly.

Pair Corralation between Kraft Heinz and Lifeway Foods

Considering the 90-day investment horizon Kraft Heinz Co is expected to generate 0.55 times more return on investment than Lifeway Foods. However, Kraft Heinz Co is 1.83 times less risky than Lifeway Foods. It trades about 0.08 of its potential returns per unit of risk. Lifeway Foods is currently generating about -0.07 per unit of risk. If you would invest  3,068  in Kraft Heinz Co on September 19, 2024 and sell it today you would earn a total of  57.00  from holding Kraft Heinz Co or generate 1.86% return on investment over 90 days.

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

Kraft Heinz Co  vs.  Lifeway Foods

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 latest uncertain performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Lifeway Foods

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lifeway Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Lifeway Foods showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kraft Heinz and Lifeway Foods

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

The idea behind Kraft Heinz Co and Lifeway Foods 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.