Correlation Between Freshpet and BRF SA
Can any of the company-specific risk be diversified away by investing in both Freshpet 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 Freshpet and BRF SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freshpet and BRF SA ADR, you can compare the effects of market volatilities on Freshpet 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 Freshpet with a short position of BRF SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freshpet and BRF SA.
Diversification Opportunities for Freshpet and BRF SA
Very good diversification
The 3 months correlation between Freshpet and BRF is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Freshpet 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 Freshpet 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 Freshpet 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 Freshpet i.e., Freshpet and BRF SA go up and down completely randomly.
Pair Corralation between Freshpet and BRF SA
Given the investment horizon of 90 days Freshpet is expected to generate 1.41 times more return on investment than BRF SA. However, Freshpet is 1.41 times more volatile than BRF SA ADR. It trades about 0.23 of its potential returns per unit of risk. BRF SA ADR is currently generating about -0.05 per unit of risk. If you would invest 13,468 in Freshpet on August 27, 2024 and sell it today you would earn a total of 2,000 from holding Freshpet or generate 14.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freshpet vs. BRF SA ADR
Performance |
| Timeline |
| Freshpet |
| BRF SA ADR |
Freshpet and BRF SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freshpet and BRF SA
The main advantage of trading using opposite Freshpet and BRF SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freshpet 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.| Freshpet vs. Post Holdings | Freshpet vs. Simply Good Foods | Freshpet vs. Treehouse Foods | Freshpet vs. J J Snack |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |