Correlation Between Campbell Soup and Nissin Foods

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

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

Diversification Opportunities for Campbell Soup and Nissin Foods

0.66

Correlation Coefficient

Campbell Soup  Nissin Foods

Poor diversification

The 3 months correlation between Campbell and Nissin is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Campbell Soup and Nissin Foods Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissin Foods Holdings and Campbell Soup 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 Campbell Soup are associated (or correlated) with Nissin Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nissin Foods Holdings has no effect on the direction of Campbell Soup i.e., Campbell Soup and Nissin Foods go up and down completely randomly.

Pair Corralation between Campbell Soup and Nissin Foods

If you would invest  2,420  in Nissin Foods Holdings on September 1, 2024 and sell it today you would earn a total of  0.00  from holding Nissin Foods Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	30.16%
Values	Daily Returns

Campbell Soup  vs.  Nissin Foods Holdings

Campbell Soup

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Campbell Soup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Nissin Foods Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Campbell Soup and Nissin Foods

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

The idea behind Campbell Soup and Nissin Foods Holdings 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.