Correlation Between Mccormick and BG Foods

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

Diversification Opportunities for Mccormick and BG Foods

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Mccormick and BG Foods is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Mccormick and BG Foods Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods Holdings and Mccormick 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 Mccormick are associated (or correlated) with BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods Holdings has no effect on the direction of Mccormick i.e., Mccormick and BG Foods go up and down completely randomly.

Pair Corralation between Mccormick and BG Foods

Considering the 90-day investment horizon Mccormick is expected to generate 0.48 times more return on investment than BG Foods. However, Mccormick is 2.09 times less risky than BG Foods. It trades about 0.25 of its potential returns per unit of risk. BG Foods Holdings is currently generating about -0.29 per unit of risk. If you would invest  7,864  in Mccormick on September 1, 2022 and sell it today you would earn a total of  654.00  from holding Mccormick or generate 8.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Mccormick  vs.  BG Foods Holdings

 Performance (%) 
       Timeline  
Mccormick 
Mccormick Performance
0 of 100
Over the last 90 days Mccormick has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Mccormick is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Mccormick Price Channel

BG Foods Holdings 
BG Foods Performance
0 of 100
Over the last 90 days BG Foods Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in December 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

BG Foods Price Channel

Mccormick and BG Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mccormick and BG Foods

The main advantage of trading using opposite Mccormick and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mccormick position performs unexpectedly, BG 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 BG Foods will offset losses from the drop in BG Foods' long position.
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The idea behind Mccormick and BG 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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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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