Correlation Between Bunge and Post Holdings
Can any of the company-specific risk be diversified away by investing in both Bunge and Post Holdings 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 Post Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunge Limited and Post Holdings, you can compare the effects of market volatilities on Bunge and Post Holdings 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 Post Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and Post Holdings.
Diversification Opportunities for Bunge and Post Holdings
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bunge and Post is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Post Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Post Holdings 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 Post Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Post Holdings has no effect on the direction of Bunge i.e., Bunge and Post Holdings go up and down completely randomly.
Pair Corralation between Bunge and Post Holdings
Allowing for the 90-day total investment horizon Bunge Limited is expected to under-perform the Post Holdings. In addition to that, Bunge is 1.09 times more volatile than Post Holdings. It trades about -0.02 of its total potential returns per unit of risk. Post Holdings is currently generating about 0.2 per unit of volatility. If you would invest 11,146 in Post Holdings on August 28, 2024 and sell it today you would earn a total of 636.00 from holding Post Holdings or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bunge Limited vs. Post Holdings
Performance |
| Timeline |
| Bunge Limited |
| Post Holdings |
Bunge and Post Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunge and Post Holdings
The main advantage of trading using opposite Bunge and Post Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge position performs unexpectedly, Post Holdings 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 Post Holdings will offset losses from the drop in Post Holdings' long position.| Bunge vs. Lancaster Colony | Bunge vs. Treehouse Foods | Bunge vs. John B Sanfilippo | Bunge vs. Seneca Foods Corp |
| Post Holdings vs. Simply Good Foods | Post Holdings vs. Treehouse Foods | Post Holdings vs. J J Snack | Post Holdings vs. Central Garden Pet |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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