Correlation Between Kraft Heinz and Pilgrims Pride

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

Diversification Opportunities for Kraft Heinz and Pilgrims Pride

0.59

Correlation Coefficient

Kraft Heinz  Pilgrims Pride

Very weak diversification

The 3 months correlation between Kraft and Pilgrims is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Pilgrims Pride Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pilgrims Pride Corp 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 Pilgrims Pride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pilgrims Pride Corp has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and Pilgrims Pride go up and down completely randomly.

Pair Corralation between Kraft Heinz and Pilgrims Pride

Considering the 90-day investment horizon Kraft Heinz is expected to generate 10.26 times less return on investment than Pilgrims Pride. But when comparing it to its historical volatility, Kraft Heinz Co is 1.36 times less risky than Pilgrims Pride. It trades about 0.02 of its potential returns per unit of risk. Pilgrims Pride Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,540  in Pilgrims Pride Corp on December 28, 2024 and sell it today you would earn a total of  799.00  from holding Pilgrims Pride Corp or generate 17.6% return on investment over 90 days.

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

Kraft Heinz Co  vs.  Pilgrims Pride Corp

Kraft Heinz

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kraft Heinz Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pilgrims Pride Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pilgrims Pride Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Pilgrims Pride exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kraft Heinz and Pilgrims Pride

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

The idea behind Kraft Heinz Co and Pilgrims Pride Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.