Correlation Between Central Garden and Marfrig Global
Can any of the company-specific risk be diversified away by investing in both Central Garden and Marfrig Global 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 Marfrig Global 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 Marfrig Global Foods, you can compare the effects of market volatilities on Central Garden and Marfrig Global 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 Marfrig Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and Marfrig Global.
Diversification Opportunities for Central Garden and Marfrig Global
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Central and Marfrig is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods 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 Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Central Garden i.e., Central Garden and Marfrig Global go up and down completely randomly.
Pair Corralation between Central Garden and Marfrig Global
Assuming the 90 days horizon Central Garden is expected to generate 4.44 times less return on investment than Marfrig Global. But when comparing it to its historical volatility, Central Garden Pet is 1.63 times less risky than Marfrig Global. It trades about 0.03 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 142.00 in Marfrig Global Foods on August 31, 2024 and sell it today you would earn a total of 168.00 from holding Marfrig Global Foods or generate 118.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Central Garden Pet vs. Marfrig Global Foods
Performance |
| Timeline |
| Central Garden Pet |
| Marfrig Global Foods |
Central Garden and Marfrig Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Garden and Marfrig Global
The main advantage of trading using opposite Central Garden and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Garden position performs unexpectedly, Marfrig Global 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 Marfrig Global will offset losses from the drop in Marfrig Global's long position.| Central Garden vs. Seneca Foods Corp | Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack |
| Marfrig Global vs. The A2 Milk | Marfrig Global vs. Altavoz Entertainment | Marfrig Global vs. Artisan Consumer Goods | Marfrig Global vs. General Mills |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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