Correlation Between Hershey Foods and IMPERIAL SUGAR

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Can any of the company-specific risk be diversified away by investing in both Hershey Foods and IMPERIAL SUGAR 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 Hershey Foods and IMPERIAL SUGAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hershey Foods Corp and IMPERIAL SUGAR CO, you can compare the effects of market volatilities on Hershey Foods and IMPERIAL SUGAR 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 Hershey Foods with a short position of IMPERIAL SUGAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hershey Foods and IMPERIAL SUGAR.

Diversification Opportunities for Hershey Foods and IMPERIAL SUGAR

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Hershey and IMPERIAL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hershey Foods Corp and IMPERIAL SUGAR CO in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL SUGAR CO and Hershey Foods 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 Hershey Foods Corp are associated (or correlated) with IMPERIAL SUGAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL SUGAR CO has no effect on the direction of Hershey Foods i.e., Hershey Foods and IMPERIAL SUGAR go up and down completely randomly.

Pair Corralation between Hershey Foods and IMPERIAL SUGAR

If you would invest  13,097  in Hershey Foods Corp on February 18, 2022 and sell it today you would earn a total of  7,672  from holding Hershey Foods Corp or generate 58.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Hershey Foods Corp  vs.  IMPERIAL SUGAR CO

 Performance (%) 
      Timeline 
Hershey Foods Corp 
Hershey Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Hershey Foods Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Hershey Foods is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Hershey Price Channel

IMPERIAL SUGAR CO 
IMPERIAL Performance
0 of 100
Over the last 90 days IMPERIAL SUGAR CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, IMPERIAL SUGAR is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Hershey Foods and IMPERIAL SUGAR Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Hershey Foods and IMPERIAL SUGAR

The main advantage of trading using opposite Hershey Foods and IMPERIAL SUGAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hershey Foods position performs unexpectedly, IMPERIAL SUGAR 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 IMPERIAL SUGAR will offset losses from the drop in IMPERIAL SUGAR's long position.
The idea behind Hershey Foods Corp and IMPERIAL SUGAR CO 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.

IMPERIAL SUGAR CO

Pair trading matchups for IMPERIAL SUGAR

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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