Correlation Between McCormick Company and Armanino Foods

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

Diversification Opportunities for McCormick Company and Armanino Foods

-0.41

Correlation Coefficient

McCormick Company  Armanino Foods

Very good diversification

The 3 months correlation between McCormick and Armanino is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and Armanino Foods New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armanino Foods New 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 Armanino Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armanino Foods New has no effect on the direction of McCormick Company i.e., McCormick Company and Armanino Foods go up and down completely randomly.

Pair Corralation between McCormick Company and Armanino Foods

If you would invest  6,026  in McCormick Company Incorporated on October 5, 2024 and sell it today you would earn a total of  1,559  from holding McCormick Company Incorporated or generate 25.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.32%
Values	Daily Returns

McCormick Company Incorporated  vs.  Armanino Foods New

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 rather sound forward-looking signals, McCormick Company is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Armanino Foods New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armanino Foods New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Armanino Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with McCormick Company and Armanino Foods

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

The idea behind McCormick Company Incorporated and Armanino Foods New 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 Commodity Directory module to find actively traded commodities issued by global exchanges.