Correlation Between Central Garden and Bon Natural
Can any of the company-specific risk be diversified away by investing in both Central Garden and Bon Natural 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 Central Garden and Bon Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Garden Pet and Bon Natural Life, you can compare the effects of market volatilities on Central Garden and Bon Natural 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 Central Garden with a short position of Bon Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and Bon Natural.
Diversification Opportunities for Central Garden and Bon Natural
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Central and Bon is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and Bon Natural Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bon Natural Life and Central Garden 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 Central Garden Pet are associated (or correlated) with Bon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bon Natural Life has no effect on the direction of Central Garden i.e., Central Garden and Bon Natural go up and down completely randomly.
Pair Corralation between Central Garden and Bon Natural
Assuming the 90 days horizon Central Garden Pet is expected to generate 0.35 times more return on investment than Bon Natural. However, Central Garden Pet is 2.89 times less risky than Bon Natural. It trades about -0.01 of its potential returns per unit of risk. Bon Natural Life is currently generating about -0.05 per unit of risk. If you would invest 3,238 in Central Garden Pet on November 3, 2024 and sell it today you would lose (119.00) from holding Central Garden Pet or give up 3.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Garden Pet vs. Bon Natural Life
Performance |
| Timeline |
| Central Garden Pet |
| Bon Natural Life |
Central Garden and Bon Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Garden and Bon Natural
The main advantage of trading using opposite Central Garden and Bon Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Garden position performs unexpectedly, Bon Natural 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 Bon Natural will offset losses from the drop in Bon Natural's long position.| Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack | Central Garden vs. Central Garden Pet |
| Bon Natural vs. Grand Havana | Bon Natural vs. Central Garden Pet | Bon Natural vs. Natures Sunshine Products | Bon Natural vs. Central Garden Pet |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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