Correlation Between Kraft Heinz and WH Group

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

Diversification Opportunities for Kraft Heinz and WH Group

-0.35

Correlation Coefficient

Kraft Heinz  WH Group

Very good diversification

The 3 months correlation between Kraft and WHGRF is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and WH Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WH Group Limited 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 WH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WH Group Limited has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and WH Group go up and down completely randomly.

Pair Corralation between Kraft Heinz and WH Group

Considering the 90-day investment horizon Kraft Heinz Co is expected to under-perform the WH Group. In addition to that, Kraft Heinz is 2.03 times more volatile than WH Group Limited. It trades about -0.06 of its total potential returns per unit of risk. WH Group Limited is currently generating about 0.3 per unit of volatility. If you would invest  76.00  in WH Group Limited on September 11, 2024 and sell it today you would earn a total of  3.00  from holding WH Group Limited or generate 3.95% return on investment over 90 days.

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

Kraft Heinz Co  vs.  WH Group Limited

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.

WH Group Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WH Group Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, WH Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kraft Heinz and WH Group

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

The idea behind Kraft Heinz Co and WH Group Limited 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.