Correlation Between Kraft Heinz and ConAgra Foods

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

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

Diversification Opportunities for Kraft Heinz and ConAgra Foods

0.86

Correlation Coefficient

Kraft Heinz  ConAgra Foods

Very poor diversification

The 3 months correlation between Kraft and ConAgra is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods and Kraft Heinz 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 Kraft Heinz Co 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 Kraft Heinz i.e., Kraft Heinz and ConAgra Foods go up and down completely randomly.

Pair Corralation between Kraft Heinz and ConAgra Foods

Considering the 90-day investment horizon Kraft Heinz Co is expected to under-perform the ConAgra Foods. In addition to that, Kraft Heinz is 1.41 times more volatile than ConAgra Foods. It trades about -0.06 of its total potential returns per unit of risk. ConAgra Foods is currently generating about 0.04 per unit of volatility. If you would invest  3,030  in ConAgra Foods on February 4, 2024 and sell it today you would earn a total of  29.00  from holding ConAgra Foods or generate 0.96% return on investment over 90 days.

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

Kraft Heinz Co  vs.  ConAgra Foods

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. In spite of rather sound technical indicators, Kraft Heinz is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

ConAgra Foods

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ConAgra Foods are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ConAgra Foods may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Kraft Heinz and ConAgra Foods

The main advantage of trading using opposite Kraft Heinz and ConAgra Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kraft Heinz 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 Kraft Heinz Co 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.