Correlation Between Marfrig Global and Charter Communications
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and Charter Communications 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 Marfrig Global and Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marfrig Global Foods and Charter Communications, you can compare the effects of market volatilities on Marfrig Global and Charter Communications 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 Marfrig Global with a short position of Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Charter Communications.
Diversification Opportunities for Marfrig Global and Charter Communications
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marfrig and Charter is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and Marfrig Global 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 Marfrig Global Foods are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Marfrig Global i.e., Marfrig Global and Charter Communications go up and down completely randomly.
Pair Corralation between Marfrig Global and Charter Communications
Assuming the 90 days trading horizon Marfrig Global Foods is expected to generate 0.67 times more return on investment than Charter Communications. However, Marfrig Global Foods is 1.5 times less risky than Charter Communications. It trades about 0.45 of its potential returns per unit of risk. Charter Communications is currently generating about 0.24 per unit of risk. If you would invest 1,476 in Marfrig Global Foods on August 27, 2024 and sell it today you would earn a total of 360.00 from holding Marfrig Global Foods or generate 24.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marfrig Global Foods vs. Charter Communications
Performance |
| Timeline |
| Marfrig Global Foods |
| Charter Communications |
Marfrig Global and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and Charter Communications
The main advantage of trading using opposite Marfrig Global and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| Marfrig Global vs. Minerva SA | Marfrig Global vs. Companhia Siderrgica Nacional | Marfrig Global vs. Cyrela Brazil Realty |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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