Correlation Between United States and Kraft Heinz

Can any of the company-specific risk be diversified away by investing in both United States and Kraft Heinz 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 United States and Kraft Heinz into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United States Steel and Kraft Heinz Co, you can compare the effects of market volatilities on United States and Kraft Heinz 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 United States with a short position of Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Kraft Heinz.

Diversification Opportunities for United States and Kraft Heinz

0.0

Correlation Coefficient

United States  Kraft Heinz

Pay attention - limited upside

The 3 months correlation between United and Kraft is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz and United States 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 United States Steel are associated (or correlated) with Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of United States i.e., United States and Kraft Heinz go up and down completely randomly.

Pair Corralation between United States and Kraft Heinz

Assuming the 90 days trading horizon United States Steel is expected to under-perform the Kraft Heinz. In addition to that, United States is 2.64 times more volatile than Kraft Heinz Co. It trades about -0.18 of its total potential returns per unit of risk. Kraft Heinz Co is currently generating about -0.08 per unit of volatility. If you would invest  3,032  in Kraft Heinz Co on October 9, 2024 and sell it today you would lose (132.00) from holding Kraft Heinz Co or give up 4.35% of portfolio value over 90 days.

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

United States Steel  vs.  Kraft Heinz Co

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kraft Heinz

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kraft Heinz Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with United States and Kraft Heinz

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

The idea behind United States Steel and Kraft Heinz Co 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.