Correlation Between Kraft Heinz and Smart For

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

Diversification Opportunities for Kraft Heinz and Smart For

0.72

Correlation Coefficient

Kraft Heinz  Smart For

Poor diversification

The 3 months correlation between Kraft and Smart is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Smart for Life, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart for Life, 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 Smart For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart for Life, has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and Smart For go up and down completely randomly.

Pair Corralation between Kraft Heinz and Smart For

Considering the 90-day investment horizon Kraft Heinz Co is expected to generate 0.04 times more return on investment than Smart For. However, Kraft Heinz Co is 25.43 times less risky than Smart For. It trades about -0.13 of its potential returns per unit of risk. Smart for Life, is currently generating about -0.69 per unit of risk. If you would invest  3,476  in Kraft Heinz Co on September 12, 2024 and sell it today you would lose (317.00) from holding Kraft Heinz Co or give up 9.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	18.75%
Values	Daily Returns

Kraft Heinz Co  vs.  Smart for Life,

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.

Smart for Life,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart for Life, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Kraft Heinz and Smart For

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

The idea behind Kraft Heinz Co and Smart for Life, 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.