Correlation Between Edible Garden and BRF SA
Can any of the company-specific risk be diversified away by investing in both Edible Garden and BRF SA 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 Edible Garden and BRF SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edible Garden AG and BRF SA ADR, you can compare the effects of market volatilities on Edible Garden and BRF SA 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 Edible Garden with a short position of BRF SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edible Garden and BRF SA.
Diversification Opportunities for Edible Garden and BRF SA
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Edible and BRF is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Edible Garden AG and BRF SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRF SA ADR and Edible 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 Edible Garden AG are associated (or correlated) with BRF SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRF SA ADR has no effect on the direction of Edible Garden i.e., Edible Garden and BRF SA go up and down completely randomly.
Pair Corralation between Edible Garden and BRF SA
Given the investment horizon of 90 days Edible Garden AG is expected to under-perform the BRF SA. In addition to that, Edible Garden is 3.69 times more volatile than BRF SA ADR. It trades about -0.1 of its total potential returns per unit of risk. BRF SA ADR is currently generating about -0.05 per unit of volatility. If you would invest 449.00 in BRF SA ADR on August 27, 2024 and sell it today you would lose (13.00) from holding BRF SA ADR or give up 2.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edible Garden AG vs. BRF SA ADR
Performance |
| Timeline |
| Edible Garden AG |
| BRF SA ADR |
Edible Garden and BRF SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edible Garden and BRF SA
The main advantage of trading using opposite Edible Garden and BRF SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edible Garden position performs unexpectedly, BRF SA 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 BRF SA will offset losses from the drop in BRF SA's long position.| Edible Garden vs. Golden Agri Resources | Edible Garden vs. Vital Farms | Edible Garden vs. Local Bounti Corp | Edible Garden vs. Fresh Del Monte |
| BRF SA vs. Marfrig Global Foods | BRF SA vs. Pilgrims Pride Corp | BRF SA vs. John B Sanfilippo | BRF SA vs. Seneca Foods Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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