Correlation Between McCormick Company and Real Good

Can any of the company-specific risk be diversified away by investing in both McCormick Company and Real 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 McCormick Company and Real Good 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 Real Good Food, you can compare the effects of market volatilities on McCormick Company and Real 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 McCormick Company with a short position of Real Good. Check out your portfolio center. Please also check ongoing floating volatility patterns of McCormick Company and Real Good.

Diversification Opportunities for McCormick Company and Real Good

-0.22

Correlation Coefficient

McCormick Company  Real Good

Very good diversification

The 3 months correlation between McCormick and Real is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and Real Good Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Good Food 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 Real Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Good Food has no effect on the direction of McCormick Company i.e., McCormick Company and Real Good go up and down completely randomly.

Pair Corralation between McCormick Company and Real Good

Assuming the 90 days horizon McCormick Company is expected to generate 34.9 times less return on investment than Real Good. But when comparing it to its historical volatility, McCormick Company Incorporated is 36.39 times less risky than Real Good. It trades about 0.05 of its potential returns per unit of risk. Real Good Food is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  180.00  in Real Good Food on October 8, 2024 and sell it today you would lose (150.00) from holding Real Good Food or give up 83.33% of portfolio value over 90 days.

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

McCormick Company Incorporated  vs.  Real Good Food

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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Real Good Food

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Real Good Food are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Real Good reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with McCormick Company and Real Good

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

The idea behind McCormick Company Incorporated and Real Good Food 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.