Correlation Between BG Foods and JBS SA
Can any of the company-specific risk be diversified away by investing in both BG Foods and JBS SA 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 JBS SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BG Foods and JBS SA, you can compare the effects of market volatilities on BG Foods and JBS SA 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 JBS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BG Foods and JBS SA.
Diversification Opportunities for BG Foods and JBS SA
Very good diversification
The 3 months correlation between BGS and JBS is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA 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 JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of BG Foods i.e., BG Foods and JBS SA go up and down completely randomly.
Pair Corralation between BG Foods and JBS SA
Considering the 90-day investment horizon BG Foods is expected to under-perform the JBS SA. In addition to that, BG Foods is 1.51 times more volatile than JBS SA. It trades about -0.03 of its total potential returns per unit of risk. JBS SA is currently generating about 0.09 per unit of volatility. If you would invest 637.00 in JBS SA on August 31, 2024 and sell it today you would earn a total of 594.00 from holding JBS SA or generate 93.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
BG Foods vs. JBS SA
Performance |
| Timeline |
| BG Foods |
| JBS SA |
BG Foods and JBS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BG Foods and JBS SA
The main advantage of trading using opposite BG Foods and JBS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BG Foods position performs unexpectedly, JBS SA 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 JBS SA will offset losses from the drop in JBS SA's long position.The idea behind BG Foods and JBS 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.| JBS SA vs. The A2 Milk | JBS SA vs. Altavoz Entertainment | JBS SA vs. Artisan Consumer Goods | JBS SA 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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