Correlation Between Bunge and Fresh Grapes
Can any of the company-specific risk be diversified away by investing in both Bunge and Fresh Grapes 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 Fresh Grapes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunge Limited and Fresh Grapes LLC, you can compare the effects of market volatilities on Bunge and Fresh Grapes 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 Fresh Grapes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and Fresh Grapes.
Diversification Opportunities for Bunge and Fresh Grapes
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bunge and Fresh is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Fresh Grapes LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Grapes LLC 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 Fresh Grapes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Grapes LLC has no effect on the direction of Bunge i.e., Bunge and Fresh Grapes go up and down completely randomly.
Pair Corralation between Bunge and Fresh Grapes
Allowing for the 90-day total investment horizon Bunge Limited is expected to under-perform the Fresh Grapes. But the stock apears to be less risky and, when comparing its historical volatility, Bunge Limited is 5.21 times less risky than Fresh Grapes. The stock trades about -0.01 of its potential returns per unit of risk. The Fresh Grapes LLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 82.00 in Fresh Grapes LLC on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Fresh Grapes LLC or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bunge Limited vs. Fresh Grapes LLC
Performance |
| Timeline |
| Bunge Limited |
| Fresh Grapes LLC |
Bunge and Fresh Grapes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunge and Fresh Grapes
The main advantage of trading using opposite Bunge and Fresh Grapes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge position performs unexpectedly, Fresh Grapes 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 Fresh Grapes will offset losses from the drop in Fresh Grapes' long position.| Bunge vs. Lancaster Colony | Bunge vs. Treehouse Foods | Bunge vs. John B Sanfilippo | Bunge vs. Seneca Foods Corp |
| Fresh Grapes vs. Andrew Peller Limited | Fresh Grapes vs. Naked Wines plc | Fresh Grapes vs. Willamette Valley Vineyards | Fresh Grapes vs. Splash Beverage Group |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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