Correlation Between Marfrig Global and New Oriental
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and New Oriental 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 New Oriental 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 New Oriental Education, you can compare the effects of market volatilities on Marfrig Global and New Oriental 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 New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and New Oriental.
Diversification Opportunities for Marfrig Global and New Oriental
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Marfrig and New is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education 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 New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of Marfrig Global i.e., Marfrig Global and New Oriental go up and down completely randomly.
Pair Corralation between Marfrig Global and New Oriental
Assuming the 90 days trading horizon Marfrig Global Foods is expected to generate 0.82 times more return on investment than New Oriental. However, Marfrig Global Foods is 1.22 times less risky than New Oriental. It trades about 0.33 of its potential returns per unit of risk. New Oriental Education is currently generating about -0.1 per unit of risk. If you would invest 1,364 in Marfrig Global Foods on August 30, 2024 and sell it today you would earn a total of 511.00 from holding Marfrig Global Foods or generate 37.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marfrig Global Foods vs. New Oriental Education
Performance |
| Timeline |
| Marfrig Global Foods |
| New Oriental Education |
Marfrig Global and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and New Oriental
The main advantage of trading using opposite Marfrig Global and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.| Marfrig Global vs. BRF SA | Marfrig Global vs. Companhia Siderrgica Nacional | Marfrig Global vs. Cyrela Brazil Realty |
| New Oriental vs. Prudential Financial | New Oriental vs. United Airlines Holdings | New Oriental vs. British American Tobacco | New Oriental vs. Southwest Airlines Co |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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