Correlation Between SW Seed and Mondelez International

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

By analyzing existing cross correlation between SW Seed Company and Mondelez International, you can compare the effects of market volatilities on SW Seed and Mondelez International 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 SW Seed with a short position of Mondelez International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SW Seed and Mondelez International.

Diversification Opportunities for SW Seed and Mondelez International

0.56

Correlation Coefficient

SW Seed  Mondelez International

Very weak diversification

The 3 months correlation between SANW and Mondelez is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SW Seed Company and Mondelez International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondelez International and SW Seed 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 SW Seed Company are associated (or correlated) with Mondelez International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondelez International has no effect on the direction of SW Seed i.e., SW Seed and Mondelez International go up and down completely randomly.

Pair Corralation between SW Seed and Mondelez International

Given the investment horizon of 90 days SW Seed Company is expected to under-perform the Mondelez International. In addition to that, SW Seed is 4.76 times more volatile than Mondelez International. It trades about -0.04 of its total potential returns per unit of risk. Mondelez International is currently generating about 0.03 per unit of volatility. If you would invest  6,461  in Mondelez International on February 14, 2024 and sell it today you would earn a total of  689.31  from holding Mondelez International or generate 10.67% return on investment over 90 days.

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

SW Seed Company  vs.  Mondelez International

SW Seed Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SW Seed Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Mondelez International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mondelez International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Mondelez International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SW Seed and Mondelez International

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

The idea behind SW Seed Company and Mondelez 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.