Correlation Between McCormick Company and Global X

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

Diversification Opportunities for McCormick Company and Global X

-0.26

Correlation Coefficient

McCormick Company  Global X

Very good diversification

The 3 months correlation between McCormick and Global is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and Global X Millennials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Millennials 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Millennials has no effect on the direction of McCormick Company i.e., McCormick Company and Global X go up and down completely randomly.

Pair Corralation between McCormick Company and Global X

Considering the 90-day investment horizon McCormick Company Incorporated is expected to generate 1.19 times more return on investment than Global X. However, McCormick Company is 1.19 times more volatile than Global X Millennials. It trades about -0.06 of its potential returns per unit of risk. Global X Millennials is currently generating about -0.26 per unit of risk. If you would invest  7,705  in McCormick Company Incorporated on October 7, 2024 and sell it today you would lose (120.00) from holding McCormick Company Incorporated or give up 1.56% 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.  Global X Millennials

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.

Global X Millennials

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Millennials are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting essential indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with McCormick Company and Global X

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

The idea behind McCormick Company Incorporated and Global X Millennials 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..