Correlation Between BG Foods and Aryzta AG
Can any of the company-specific risk be diversified away by investing in both BG Foods and Aryzta AG 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 BG Foods and Aryzta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BG Foods and Aryzta AG PK, you can compare the effects of market volatilities on BG Foods and Aryzta AG 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 BG Foods with a short position of Aryzta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of BG Foods and Aryzta AG.
Diversification Opportunities for BG Foods and Aryzta AG
Poor diversification
The 3 months correlation between BGS and Aryzta is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods and Aryzta AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aryzta AG PK and BG Foods 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 BG Foods are associated (or correlated) with Aryzta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aryzta AG PK has no effect on the direction of BG Foods i.e., BG Foods and Aryzta AG go up and down completely randomly.
Pair Corralation between BG Foods and Aryzta AG
Considering the 90-day investment horizon BG Foods is expected to under-perform the Aryzta AG. In addition to that, BG Foods is 1.8 times more volatile than Aryzta AG PK. It trades about -0.21 of its total potential returns per unit of risk. Aryzta AG PK is currently generating about -0.12 per unit of volatility. If you would invest 90.00 in Aryzta AG PK on August 31, 2024 and sell it today you would lose (7.00) from holding Aryzta AG PK or give up 7.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BG Foods vs. Aryzta AG PK
Performance |
| Timeline |
| BG Foods |
| Aryzta AG PK |
BG Foods and Aryzta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BG Foods and Aryzta AG
The main advantage of trading using opposite BG Foods and Aryzta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BG Foods position performs unexpectedly, Aryzta AG 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 Aryzta AG will offset losses from the drop in Aryzta AG's long position.The idea behind BG Foods and Aryzta AG PK 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.| Aryzta AG vs. The A2 Milk | Aryzta AG vs. Altavoz Entertainment | Aryzta AG vs. Artisan Consumer Goods | Aryzta AG 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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