Correlation Between Real Good and McCormick Company

Can any of the company-specific risk be diversified away by investing in both Real Good and McCormick Company 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 Real Good and McCormick Company into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Real Good Food and McCormick Company Incorporated, you can compare the effects of market volatilities on Real Good and McCormick Company 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 Real Good with a short position of McCormick Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Good and McCormick Company.

Diversification Opportunities for Real Good and McCormick Company

0.56

Correlation Coefficient

Real Good  McCormick Company

Very weak diversification

The 3 months correlation between Real and McCormick is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Real Good Food and McCormick Company Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McCormick Company and Real Good 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 Real Good Food are associated (or correlated) with McCormick Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McCormick Company has no effect on the direction of Real Good i.e., Real Good and McCormick Company go up and down completely randomly.

Pair Corralation between Real Good and McCormick Company

Considering the 90-day investment horizon Real Good Food is expected to generate 113.9 times more return on investment than McCormick Company. However, Real Good is 113.9 times more volatile than McCormick Company Incorporated. It trades about 0.12 of its potential returns per unit of risk. McCormick Company Incorporated is currently generating about -0.25 per unit of risk. If you would invest  282.00  in Real Good Food on October 23, 2024 and sell it today you would lose (268.00) from holding Real Good Food or give up 95.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.89%
Values	Daily Returns

Real Good Food  vs.  McCormick Company Incorporated

Real Good Food

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Real Good Food are ranked lower than 4 (%) 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.

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 latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Real Good and McCormick Company

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

The idea behind Real Good Food and McCormick Company Incorporated 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.