Correlation Between Aryzta AG and BG Foods
Can any of the company-specific risk be diversified away by investing in both Aryzta AG 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 Aryzta AG and BG Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aryzta AG PK and BG Foods, you can compare the effects of market volatilities on Aryzta AG 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 Aryzta AG with a short position of BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aryzta AG and BG Foods.
Diversification Opportunities for Aryzta AG and BG Foods
Poor diversification
The 3 months correlation between Aryzta and BGS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aryzta AG PK and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods and Aryzta AG 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 Aryzta AG PK 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 has no effect on the direction of Aryzta AG i.e., Aryzta AG and BG Foods go up and down completely randomly.
Pair Corralation between Aryzta AG and BG Foods
Assuming the 90 days horizon Aryzta AG PK is expected to generate 0.55 times more return on investment than BG Foods. However, Aryzta AG PK is 1.8 times less risky than BG Foods. It trades about -0.12 of its potential returns per unit of risk. BG Foods is currently generating about -0.21 per unit of risk. If you would invest 90.00 in Aryzta AG PK on August 31, 2024 and sell it today you would lose (7.00) from holding Aryzta AG PK or give up 7.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aryzta AG PK vs. BG Foods
Performance |
| Timeline |
| Aryzta AG PK |
| BG Foods |
Aryzta AG and BG Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aryzta AG and BG Foods
The main advantage of trading using opposite Aryzta AG and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aryzta AG 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.| Aryzta AG vs. The A2 Milk | Aryzta AG vs. Altavoz Entertainment | Aryzta AG vs. Artisan Consumer Goods | Aryzta AG vs. General Mills |
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 the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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