Correlation Between BRF SA and Campbell Soup
Can any of the company-specific risk be diversified away by investing in both BRF SA and Campbell Soup 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 BRF SA and Campbell Soup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRF SA ADR and Campbell Soup, you can compare the effects of market volatilities on BRF SA and Campbell Soup 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 BRF SA with a short position of Campbell Soup. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRF SA and Campbell Soup.
Diversification Opportunities for BRF SA and Campbell Soup
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BRF and Campbell is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding BRF SA ADR and Campbell Soup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campbell Soup and BRF SA 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 BRF SA ADR are associated (or correlated) with Campbell Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campbell Soup has no effect on the direction of BRF SA i.e., BRF SA and Campbell Soup go up and down completely randomly.
Pair Corralation between BRF SA and Campbell Soup
Given the investment horizon of 90 days BRF SA ADR is expected to generate 2.34 times more return on investment than Campbell Soup. However, BRF SA is 2.34 times more volatile than Campbell Soup. It trades about 0.08 of its potential returns per unit of risk. Campbell Soup is currently generating about -0.03 per unit of risk. If you would invest 133.00 in BRF SA ADR on November 2, 2024 and sell it today you would earn a total of 242.00 from holding BRF SA ADR or generate 181.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
BRF SA ADR vs. Campbell Soup
Performance |
| Timeline |
| BRF SA ADR |
| Campbell Soup |
BRF SA and Campbell Soup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRF SA and Campbell Soup
The main advantage of trading using opposite BRF SA and Campbell Soup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRF SA position performs unexpectedly, Campbell Soup 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 Campbell Soup will offset losses from the drop in Campbell Soup's long position.| BRF SA vs. Marfrig Global Foods | BRF SA vs. Pilgrims Pride Corp | BRF SA vs. John B Sanfilippo | BRF SA vs. Seneca Foods Corp |
| Campbell Soup vs. General Mills | Campbell Soup vs. Hormel Foods | Campbell Soup vs. Kellanova | Campbell Soup vs. Lamb Weston Holdings |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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