Correlation Between McCormick Company and Planting Hope

Can any of the company-specific risk be diversified away by investing in both McCormick Company and Planting Hope 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 Planting Hope 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 The Planting Hope, you can compare the effects of market volatilities on McCormick Company and Planting Hope 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 Planting Hope. Check out your portfolio center. Please also check ongoing floating volatility patterns of McCormick Company and Planting Hope.

Diversification Opportunities for McCormick Company and Planting Hope

0.16

Correlation Coefficient

McCormick Company  Planting Hope

Average diversification

The 3 months correlation between McCormick and Planting is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and The Planting Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planting Hope 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 Planting Hope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planting Hope has no effect on the direction of McCormick Company i.e., McCormick Company and Planting Hope go up and down completely randomly.

Pair Corralation between McCormick Company and Planting Hope

If you would invest  7,655  in McCormick Company Incorporated on December 11, 2024 and sell it today you would earn a total of  795.00  from holding McCormick Company Incorporated or generate 10.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

McCormick Company Incorporated  vs.  The Planting Hope

McCormick Company

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in McCormick Company Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Planting Hope

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Planting Hope are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, Planting Hope reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with McCormick Company and Planting Hope

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

The idea behind McCormick Company Incorporated and The Planting Hope 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.