Correlation Between Flowers Foods and BRF SA
Can any of the company-specific risk be diversified away by investing in both Flowers Foods 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 Flowers Foods and BRF SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowers Foods and BRF SA ADR, you can compare the effects of market volatilities on Flowers Foods 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 Flowers Foods with a short position of BRF SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowers Foods and BRF SA.
Diversification Opportunities for Flowers Foods and BRF SA
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Flowers and BRF is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods 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 Flowers Foods 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 Flowers Foods 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 Flowers Foods i.e., Flowers Foods and BRF SA go up and down completely randomly.
Pair Corralation between Flowers Foods and BRF SA
Considering the 90-day investment horizon Flowers Foods is expected to under-perform the BRF SA. But the stock apears to be less risky and, when comparing its historical volatility, Flowers Foods is 2.32 times less risky than BRF SA. The stock trades about -0.03 of its potential returns per unit of risk. The BRF SA ADR is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 419.00 in BRF SA ADR on September 14, 2024 and sell it today you would earn a total of 46.00 from holding BRF SA ADR or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowers Foods vs. BRF SA ADR
Performance |
| Timeline |
| Flowers Foods |
| BRF SA ADR |
Flowers Foods and BRF SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowers Foods and BRF SA
The main advantage of trading using opposite Flowers Foods and BRF SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowers Foods 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.| Flowers Foods vs. ConAgra Foods | Flowers Foods vs. McCormick Company Incorporated | Flowers Foods vs. Campbell Soup | Flowers Foods vs. Kellanova |
| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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