Correlation Between Glanbia PLC and Kerry

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

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

Diversification Opportunities for Glanbia PLC and Kerry

-0.04

Correlation Coefficient

Glanbia PLC  Kerry

Good diversification

The 3 months correlation between Glanbia and Kerry is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Glanbia PLC and Kerry Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerry Group and Glanbia PLC 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 Glanbia PLC are associated (or correlated) with Kerry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerry Group has no effect on the direction of Glanbia PLC i.e., Glanbia PLC and Kerry go up and down completely randomly.

Pair Corralation between Glanbia PLC and Kerry

Assuming the 90 days trading horizon Glanbia PLC is expected to under-perform the Kerry. But the stock apears to be less risky and, when comparing its historical volatility, Glanbia PLC is 1.26 times less risky than Kerry. The stock trades about -0.01 of its potential returns per unit of risk. The Kerry Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8,005  in Kerry Group on January 30, 2024 and sell it today you would earn a total of  10.00  from holding Kerry Group or generate 0.12% return on investment over 90 days.

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

Glanbia PLC  vs.  Kerry Group

Glanbia PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Glanbia PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Glanbia PLC may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Kerry Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kerry Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Kerry is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Glanbia PLC and Kerry

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

The idea behind Glanbia PLC and Kerry Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.