Correlation Between Bon Natural and Borealis Foods
Can any of the company-specific risk be diversified away by investing in both Bon Natural and Borealis Foods 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 Bon Natural and Borealis Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bon Natural Life and Borealis Foods, you can compare the effects of market volatilities on Bon Natural and Borealis Foods 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 Bon Natural with a short position of Borealis Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bon Natural and Borealis Foods.
Diversification Opportunities for Bon Natural and Borealis Foods
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bon and Borealis is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bon Natural Life and Borealis Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borealis Foods and Bon Natural 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 Bon Natural Life are associated (or correlated) with Borealis Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borealis Foods has no effect on the direction of Bon Natural i.e., Bon Natural and Borealis Foods go up and down completely randomly.
Pair Corralation between Bon Natural and Borealis Foods
Considering the 90-day investment horizon Bon Natural Life is expected to under-perform the Borealis Foods. But the stock apears to be less risky and, when comparing its historical volatility, Bon Natural Life is 1.9 times less risky than Borealis Foods. The stock trades about -0.06 of its potential returns per unit of risk. The Borealis Foods is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Borealis Foods on October 22, 2024 and sell it today you would lose (0.49) from holding Borealis Foods or give up 4.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.98% |
| Values | Daily Returns |
Bon Natural Life vs. Borealis Foods
Performance |
| Timeline |
| Bon Natural Life |
| Borealis Foods |
Bon Natural and Borealis Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bon Natural and Borealis Foods
The main advantage of trading using opposite Bon Natural and Borealis Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bon Natural position performs unexpectedly, Borealis Foods 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 Borealis Foods will offset losses from the drop in Borealis Foods' long position.| Bon Natural vs. Grand Havana | Bon Natural vs. Real Good Food | Bon Natural vs. Central Garden Pet | Bon Natural vs. Natures Sunshine Products |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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