Correlation Between Grupo Bimbo and Torque Lifestyle
Can any of the company-specific risk be diversified away by investing in both Grupo Bimbo and Torque Lifestyle 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 Grupo Bimbo and Torque Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Bimbo SAB and Torque Lifestyle Brands, you can compare the effects of market volatilities on Grupo Bimbo and Torque Lifestyle 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 Grupo Bimbo with a short position of Torque Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Bimbo and Torque Lifestyle.
Diversification Opportunities for Grupo Bimbo and Torque Lifestyle
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grupo and Torque is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bimbo SAB and Torque Lifestyle Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torque Lifestyle Brands and Grupo Bimbo 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 Grupo Bimbo SAB are associated (or correlated) with Torque Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torque Lifestyle Brands has no effect on the direction of Grupo Bimbo i.e., Grupo Bimbo and Torque Lifestyle go up and down completely randomly.
Pair Corralation between Grupo Bimbo and Torque Lifestyle
Assuming the 90 days horizon Grupo Bimbo SAB is expected to under-perform the Torque Lifestyle. But the pink sheet apears to be less risky and, when comparing its historical volatility, Grupo Bimbo SAB is 31.68 times less risky than Torque Lifestyle. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Torque Lifestyle Brands is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 0.16 in Torque Lifestyle Brands on September 12, 2024 and sell it today you would earn a total of 0.01 from holding Torque Lifestyle Brands or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Grupo Bimbo SAB vs. Torque Lifestyle Brands
Performance |
| Timeline |
| Grupo Bimbo SAB |
| Torque Lifestyle Brands |
Grupo Bimbo and Torque Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Bimbo and Torque Lifestyle
The main advantage of trading using opposite Grupo Bimbo and Torque Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Bimbo position performs unexpectedly, Torque Lifestyle 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 Torque Lifestyle will offset losses from the drop in Torque Lifestyle's long position.| Grupo Bimbo vs. Treehouse Foods | Grupo Bimbo vs. Lancaster Colony | Grupo Bimbo vs. Utz Brands | Grupo Bimbo vs. Lamb Weston Holdings |
| Torque Lifestyle vs. BRF SA ADR | Torque Lifestyle vs. Pilgrims Pride Corp | Torque Lifestyle vs. John B Sanfilippo | Torque Lifestyle vs. Seneca Foods Corp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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