Correlation Between Vita Coco and Marfrig Global
Can any of the company-specific risk be diversified away by investing in both Vita Coco 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 Vita Coco and Marfrig Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vita Coco and Marfrig Global Foods, you can compare the effects of market volatilities on Vita Coco 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 Vita Coco with a short position of Marfrig Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and Marfrig Global.
Diversification Opportunities for Vita Coco and Marfrig Global
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vita and Marfrig is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco 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 Vita Coco 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 Vita Coco 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 Vita Coco i.e., Vita Coco and Marfrig Global go up and down completely randomly.
Pair Corralation between Vita Coco and Marfrig Global
Given the investment horizon of 90 days Vita Coco is expected to generate 1.09 times less return on investment than Marfrig Global. But when comparing it to its historical volatility, Vita Coco is 1.25 times less risky than Marfrig Global. It trades about 0.21 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 247.00 in Marfrig Global Foods on August 28, 2024 and sell it today you would earn a total of 61.00 from holding Marfrig Global Foods or generate 24.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vita Coco vs. Marfrig Global Foods
Performance |
| Timeline |
| Vita Coco |
| Marfrig Global Foods |
Vita Coco and Marfrig Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vita Coco and Marfrig Global
The main advantage of trading using opposite Vita Coco and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco 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.| Vita Coco vs. Coca Cola Femsa SAB | Vita Coco vs. Coca Cola European Partners | Vita Coco vs. Embotelladora Andina SA | Vita Coco vs. Monster Beverage Corp |
| Marfrig Global vs. Artisan Consumer Goods | Marfrig Global vs. The A2 Milk | Marfrig Global vs. BioAdaptives | 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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