Correlation Between Marfrig Global and CME
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and CME 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 CME 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 CME Group, you can compare the effects of market volatilities on Marfrig Global and CME 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 CME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and CME.
Diversification Opportunities for Marfrig Global and CME
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Marfrig and CME is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group 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 CME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CME Group has no effect on the direction of Marfrig Global i.e., Marfrig Global and CME go up and down completely randomly.
Pair Corralation between Marfrig Global and CME
Assuming the 90 days trading horizon Marfrig Global Foods is expected to generate 1.57 times more return on investment than CME. However, Marfrig Global is 1.57 times more volatile than CME Group. It trades about 0.37 of its potential returns per unit of risk. CME Group is currently generating about 0.17 per unit of risk. If you would invest 1,450 in Marfrig Global Foods on August 24, 2024 and sell it today you would earn a total of 304.00 from holding Marfrig Global Foods or generate 20.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Marfrig Global Foods vs. CME Group
Performance |
| Timeline |
| Marfrig Global Foods |
| CME Group |
Marfrig Global and CME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and CME
The main advantage of trading using opposite Marfrig Global and CME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, CME 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 CME will offset losses from the drop in CME's long position.| Marfrig Global vs. Minerva SA | Marfrig Global vs. BRF SA | Marfrig Global vs. Companhia Siderrgica Nacional | Marfrig Global vs. Cyrela Brazil Realty |
| CME vs. Brpr Corporate Offices | CME vs. METISA Metalrgica Timboense | CME vs. Waste Management | CME vs. Marfrig Global Foods |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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