Correlation Between McCormick Company and Kraft Heinz

Can any of the company-specific risk be diversified away by investing in both McCormick Company and Kraft Heinz 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 McCormick Company and Kraft Heinz into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between McCormick Company Incorporated and Kraft Heinz Co, you can compare the effects of market volatilities on McCormick Company and Kraft Heinz 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 McCormick Company with a short position of Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of McCormick Company and Kraft Heinz.

Diversification Opportunities for McCormick Company and Kraft Heinz

0.54

Correlation Coefficient

McCormick Company  Kraft Heinz

Very weak diversification

The 3 months correlation between McCormick and Kraft is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz and McCormick Company 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 McCormick Company Incorporated are associated (or correlated) with Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of McCormick Company i.e., McCormick Company and Kraft Heinz go up and down completely randomly.

Pair Corralation between McCormick Company and Kraft Heinz

Assuming the 90 days horizon McCormick Company Incorporated is expected to generate 0.87 times more return on investment than Kraft Heinz. However, McCormick Company Incorporated is 1.14 times less risky than Kraft Heinz. It trades about 0.17 of its potential returns per unit of risk. Kraft Heinz Co is currently generating about 0.0 per unit of risk. If you would invest  7,501  in McCormick Company Incorporated on September 20, 2024 and sell it today you would earn a total of  345.00  from holding McCormick Company Incorporated or generate 4.6% return on investment over 90 days.

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

McCormick Company Incorporated  vs.  Kraft Heinz Co

McCormick Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days McCormick Company Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, McCormick Company is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 uncertain performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with McCormick Company and Kraft Heinz

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

The idea behind McCormick Company Incorporated and Kraft Heinz Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.