Correlation Between Lery Seafood and Hormel Foods
Can any of the company-specific risk be diversified away by investing in both Lery Seafood and Hormel 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 Lery Seafood and Hormel Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lery Seafood Group and Hormel Foods, you can compare the effects of market volatilities on Lery Seafood and Hormel 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 Lery Seafood with a short position of Hormel Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lery Seafood and Hormel Foods.
Diversification Opportunities for Lery Seafood and Hormel Foods
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lery and Hormel is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood Group and Hormel Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hormel Foods and Lery Seafood 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 Lery Seafood Group are associated (or correlated) with Hormel Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hormel Foods has no effect on the direction of Lery Seafood i.e., Lery Seafood and Hormel Foods go up and down completely randomly.
Pair Corralation between Lery Seafood and Hormel Foods
Assuming the 90 days trading horizon Lery Seafood Group is expected to under-perform the Hormel Foods. In addition to that, Lery Seafood is 1.05 times more volatile than Hormel Foods. It trades about -0.21 of its total potential returns per unit of risk. Hormel Foods is currently generating about 0.07 per unit of volatility. If you would invest 2,961 in Hormel Foods on September 26, 2024 and sell it today you would earn a total of 66.00 from holding Hormel Foods or generate 2.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lery Seafood Group vs. Hormel Foods
Performance |
Timeline |
Lery Seafood Group |
Hormel Foods |
Lery Seafood and Hormel Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lery Seafood and Hormel Foods
The main advantage of trading using opposite Lery Seafood and Hormel Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lery Seafood position performs unexpectedly, Hormel 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 Hormel Foods will offset losses from the drop in Hormel Foods' long position.Lery Seafood vs. SalMar ASA | Lery Seafood vs. Grieg Seafood ASA | Lery Seafood vs. Austevoll Seafood ASA | Lery Seafood vs. Mowi ASA |
Hormel Foods vs. Mowi ASA | Hormel Foods vs. LEROY SEAFOOD GRUNSPADR | Hormel Foods vs. Lery Seafood Group | Hormel Foods vs. Nisshin Seifun Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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