Correlation Between McCormick Company and Fidelity Momentum

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

Diversification Opportunities for McCormick Company and Fidelity Momentum

-0.57

Correlation Coefficient

McCormick Company  Fidelity Momentum

Excellent diversification

The 3 months correlation between McCormick and Fidelity is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and Fidelity Momentum Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Momentum Factor 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 Fidelity Momentum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Momentum Factor has no effect on the direction of McCormick Company i.e., McCormick Company and Fidelity Momentum go up and down completely randomly.

Pair Corralation between McCormick Company and Fidelity Momentum

Considering the 90-day investment horizon McCormick Company Incorporated is expected to generate 1.08 times more return on investment than Fidelity Momentum. However, McCormick Company is 1.08 times more volatile than Fidelity Momentum Factor. It trades about 0.04 of its potential returns per unit of risk. Fidelity Momentum Factor is currently generating about -0.08 per unit of risk. If you would invest  7,767  in McCormick Company Incorporated on December 22, 2024 and sell it today you would earn a total of  250.00  from holding McCormick Company Incorporated or generate 3.22% return on investment over 90 days.

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

McCormick Company Incorporated  vs.  Fidelity Momentum Factor

McCormick Company

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in McCormick Company Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Fidelity Momentum Factor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Momentum Factor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with McCormick Company and Fidelity Momentum

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

The idea behind McCormick Company Incorporated and Fidelity Momentum Factor 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.