Correlation Between Better Choice and BG Foods
Can any of the company-specific risk be diversified away by investing in both Better Choice and BG 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 Better Choice and BG Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Better Choice and BG Foods, you can compare the effects of market volatilities on Better Choice and BG 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 Better Choice with a short position of BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Better Choice and BG Foods.
Diversification Opportunities for Better Choice and BG Foods
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Better and BGS is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Better Choice and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods and Better Choice 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 Better Choice are associated (or correlated) with BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of Better Choice i.e., Better Choice and BG Foods go up and down completely randomly.
Pair Corralation between Better Choice and BG Foods
Given the investment horizon of 90 days Better Choice is expected to under-perform the BG Foods. In addition to that, Better Choice is 2.5 times more volatile than BG Foods. It trades about -0.07 of its total potential returns per unit of risk. BG Foods is currently generating about -0.08 per unit of volatility. If you would invest 907.00 in BG Foods on August 24, 2024 and sell it today you would lose (269.00) from holding BG Foods or give up 29.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Better Choice vs. BG Foods
Performance |
| Timeline |
| Better Choice |
| BG Foods |
Better Choice and BG Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Better Choice and BG Foods
The main advantage of trading using opposite Better Choice and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Better Choice position performs unexpectedly, BG 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 BG Foods will offset losses from the drop in BG Foods' long position.| Better Choice vs. Blue Star Foods | Better Choice vs. Stryve Foods | Better Choice vs. BioAdaptives | Better Choice vs. Beyond Oil |
| BG Foods vs. Better Choice | BG Foods vs. BioAdaptives | BG Foods vs. Beyond Oil | BG Foods vs. Bon Natural Life |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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