Correlation Between Kraft Heinz and Simply Good

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

Diversification Opportunities for Kraft Heinz and Simply Good

0.11

Correlation Coefficient

Kraft Heinz  Simply Good

Average diversification

The 3 months correlation between Kraft and Simply is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Simply Good Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Good 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 Simply Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Good Foods has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and Simply Good go up and down completely randomly.

Pair Corralation between Kraft Heinz and Simply Good

Considering the 90-day investment horizon Kraft Heinz Co is expected to generate 0.83 times more return on investment than Simply Good. However, Kraft Heinz Co is 1.2 times less risky than Simply Good. It trades about 0.01 of its potential returns per unit of risk. Simply Good Foods is currently generating about -0.11 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kraft Heinz Co  vs.  Simply Good Foods

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.

Simply Good Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simply Good Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 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 Simply Good

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

The idea behind Kraft Heinz Co and Simply Good 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.