Correlation Between Bunge and Wilmar International
Can any of the company-specific risk be diversified away by investing in both Bunge and Wilmar International 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 Wilmar International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunge Limited and Wilmar International, you can compare the effects of market volatilities on Bunge and Wilmar International 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 Wilmar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and Wilmar International.
Diversification Opportunities for Bunge and Wilmar International
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bunge and Wilmar is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Wilmar International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International 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 Wilmar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmar International has no effect on the direction of Bunge i.e., Bunge and Wilmar International go up and down completely randomly.
Pair Corralation between Bunge and Wilmar International
Allowing for the 90-day total investment horizon Bunge Limited is expected to generate 0.95 times more return on investment than Wilmar International. However, Bunge Limited is 1.05 times less risky than Wilmar International. It trades about 0.02 of its potential returns per unit of risk. Wilmar International is currently generating about 0.0 per unit of risk. If you would invest 8,561 in Bunge Limited on August 28, 2024 and sell it today you would earn a total of 283.00 from holding Bunge Limited or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Bunge Limited vs. Wilmar International
Performance |
| Timeline |
| Bunge Limited |
| Wilmar International |
Bunge and Wilmar International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunge and Wilmar International
The main advantage of trading using opposite Bunge and Wilmar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge position performs unexpectedly, Wilmar International 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 Wilmar International will offset losses from the drop in Wilmar International's long position.| Bunge vs. Lancaster Colony | Bunge vs. Treehouse Foods | Bunge vs. John B Sanfilippo | Bunge vs. Seneca Foods Corp |
| Wilmar International vs. Wesfarmers Ltd ADR | Wilmar International vs. United Overseas Bank | Wilmar International vs. Kerry Group PLC | Wilmar International vs. Overseas Chinese Banking |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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