Correlation Between Balchem and Marfrig Global
Can any of the company-specific risk be diversified away by investing in both Balchem and Marfrig Global 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 Balchem and Marfrig Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balchem and Marfrig Global Foods, you can compare the effects of market volatilities on Balchem and Marfrig Global 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 Balchem with a short position of Marfrig Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and Marfrig Global.
Diversification Opportunities for Balchem and Marfrig Global
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Balchem and Marfrig is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods and Balchem 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 Balchem are associated (or correlated) with Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Balchem i.e., Balchem and Marfrig Global go up and down completely randomly.
Pair Corralation between Balchem and Marfrig Global
Given the investment horizon of 90 days Balchem is expected to generate 2.86 times less return on investment than Marfrig Global. But when comparing it to its historical volatility, Balchem is 2.06 times less risky than Marfrig Global. It trades about 0.2 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 255.00 in Marfrig Global Foods on August 28, 2024 and sell it today you would earn a total of 53.00 from holding Marfrig Global Foods or generate 20.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balchem vs. Marfrig Global Foods
Performance |
| Timeline |
| Balchem |
| Marfrig Global Foods |
Balchem and Marfrig Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balchem and Marfrig Global
The main advantage of trading using opposite Balchem and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem position performs unexpectedly, Marfrig Global 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 Marfrig Global will offset losses from the drop in Marfrig Global's long position.| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
| Marfrig Global vs. Artisan Consumer Goods | Marfrig Global vs. The A2 Milk | Marfrig Global vs. BioAdaptives | Marfrig Global 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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