Correlation Between McCormick Company and Amira Nature

Can any of the company-specific risk be diversified away by investing in both McCormick Company and Amira Nature 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 Company and Amira Nature into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between McCormick Company Incorporated and Amira Nature Foods, you can compare the effects of market volatilities on McCormick Company and Amira Nature 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 Company with a short position of Amira Nature. Check out your portfolio center. Please also check ongoing floating volatility patterns of McCormick Company and Amira Nature.

Diversification Opportunities for McCormick Company and Amira Nature

-0.41

Correlation Coefficient

McCormick Company  Amira Nature

Very good diversification

The 3 months correlation between McCormick and Amira is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and Amira Nature Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amira Nature Foods and McCormick Company 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 Company Incorporated are associated (or correlated) with Amira Nature. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amira Nature Foods has no effect on the direction of McCormick Company i.e., McCormick Company and Amira Nature go up and down completely randomly.

Pair Corralation between McCormick Company and Amira Nature

If you would invest  6,775  in McCormick Company Incorporated on January 17, 2024 and sell it today you would earn a total of  416.00  from holding McCormick Company Incorporated or generate 6.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

McCormick Company Incorporated  vs.  Amira Nature Foods

McCormick rporated

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in McCormick Company Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward-looking signals, McCormick Company may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Amira Nature Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amira Nature Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Amira Nature is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with McCormick Company and Amira Nature

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

The idea behind McCormick Company Incorporated and Amira Nature 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..