Correlation Between WH Group and ConAgra Foods

Can any of the company-specific risk be diversified away by investing in both WH Group and ConAgra 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 WH Group and ConAgra Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WH Group Limited and ConAgra Foods, you can compare the effects of market volatilities on WH Group and ConAgra 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 WH Group with a short position of ConAgra Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of WH Group and ConAgra Foods.

Diversification Opportunities for WH Group and ConAgra Foods

-0.33

Correlation Coefficient

WH Group  ConAgra Foods

Very good diversification

The 3 months correlation between WHGRF and ConAgra is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding WH Group Limited and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods and WH Group 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 WH Group Limited are associated (or correlated) with ConAgra Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConAgra Foods has no effect on the direction of WH Group i.e., WH Group and ConAgra Foods go up and down completely randomly.

Pair Corralation between WH Group and ConAgra Foods

Assuming the 90 days horizon WH Group Limited is expected to generate 0.48 times more return on investment than ConAgra Foods. However, WH Group Limited is 2.09 times less risky than ConAgra Foods. It trades about 0.22 of its potential returns per unit of risk. ConAgra Foods is currently generating about -0.31 per unit of risk. If you would invest  81.00  in WH Group Limited on October 24, 2024 and sell it today you would earn a total of  2.00  from holding WH Group Limited or generate 2.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

WH Group Limited  vs.  ConAgra Foods

WH Group Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WH Group Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, WH Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ConAgra Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ConAgra Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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 WH Group and ConAgra Foods

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

The idea behind WH Group Limited and ConAgra Foods 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.