Correlation Between Bunge and Sendas Distribuidora
Can any of the company-specific risk be diversified away by investing in both Bunge and Sendas Distribuidora 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 Bunge and Sendas Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunge Limited and Sendas Distribuidora SA, you can compare the effects of market volatilities on Bunge and Sendas Distribuidora 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 Bunge with a short position of Sendas Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and Sendas Distribuidora.
Diversification Opportunities for Bunge and Sendas Distribuidora
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bunge and Sendas is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Sendas Distribuidora SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sendas Distribuidora and Bunge 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 Bunge Limited are associated (or correlated) with Sendas Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sendas Distribuidora has no effect on the direction of Bunge i.e., Bunge and Sendas Distribuidora go up and down completely randomly.
Pair Corralation between Bunge and Sendas Distribuidora
Allowing for the 90-day total investment horizon Bunge Limited is expected to generate 0.54 times more return on investment than Sendas Distribuidora. However, Bunge Limited is 1.85 times less risky than Sendas Distribuidora. It trades about -0.03 of its potential returns per unit of risk. Sendas Distribuidora SA is currently generating about -0.08 per unit of risk. If you would invest 9,168 in Bunge Limited on November 9, 2024 and sell it today you would lose (2,239) from holding Bunge Limited or give up 24.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.55% |
| Values | Daily Returns |
Bunge Limited vs. Sendas Distribuidora SA
Performance |
| Timeline |
| Bunge Limited |
| Sendas Distribuidora |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Bunge and Sendas Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunge and Sendas Distribuidora
The main advantage of trading using opposite Bunge and Sendas Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge position performs unexpectedly, Sendas Distribuidora 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 Sendas Distribuidora will offset losses from the drop in Sendas Distribuidora's long position.The idea behind Bunge Limited and Sendas Distribuidora SA 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.| Sendas Distribuidora vs. Village Super Market | Sendas Distribuidora vs. Weis Markets | Sendas Distribuidora vs. Ingles Markets Incorporated | Sendas Distribuidora vs. Grocery Outlet Holding |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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