Correlation Between Kraft Heinz and Natural Alternatives

Can any of the company-specific risk be diversified away by investing in both Kraft Heinz and Natural Alternatives 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 Natural Alternatives 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 Natural Alternatives International, you can compare the effects of market volatilities on Kraft Heinz and Natural Alternatives 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 Natural Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Heinz and Natural Alternatives.

Diversification Opportunities for Kraft Heinz and Natural Alternatives

0.58

Correlation Coefficient

Kraft Heinz  Natural Alternatives

Very weak diversification

The 3 months correlation between Kraft and Natural is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives 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 Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and Natural Alternatives go up and down completely randomly.

Pair Corralation between Kraft Heinz and Natural Alternatives

Considering the 90-day investment horizon Kraft Heinz Co is expected to generate 0.33 times more return on investment than Natural Alternatives. However, Kraft Heinz Co is 3.0 times less risky than Natural Alternatives. It trades about 0.25 of its potential returns per unit of risk. Natural Alternatives International is currently generating about 0.04 per unit of risk. If you would invest  3,514  in Kraft Heinz Co on January 29, 2024 and sell it today you would earn a total of  302.00  from holding Kraft Heinz Co or generate 8.59% return on investment over 90 days.

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

Kraft Heinz Co  vs.  Natural Alternatives Internati

Kraft Heinz

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kraft Heinz Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Natural Alternatives

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Alternatives International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Natural Alternatives is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kraft Heinz and Natural Alternatives

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

The idea behind Kraft Heinz Co and Natural Alternatives International 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.