Correlation Between Marfrig Global and MP Materials
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and MP Materials 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 MP Materials 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 MP Materials Corp, you can compare the effects of market volatilities on Marfrig Global and MP Materials 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 MP Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and MP Materials.
Diversification Opportunities for Marfrig Global and MP Materials
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marfrig and M2PM34 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and MP Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MP Materials Corp 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 MP Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MP Materials Corp has no effect on the direction of Marfrig Global i.e., Marfrig Global and MP Materials go up and down completely randomly.
Pair Corralation between Marfrig Global and MP Materials
Assuming the 90 days trading horizon Marfrig Global Foods is expected to generate 1.14 times more return on investment than MP Materials. However, Marfrig Global is 1.14 times more volatile than MP Materials Corp. It trades about 0.07 of its potential returns per unit of risk. MP Materials Corp is currently generating about -0.01 per unit of risk. If you would invest 702.00 in Marfrig Global Foods on October 11, 2024 and sell it today you would earn a total of 993.00 from holding Marfrig Global Foods or generate 141.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.38% |
| Values | Daily Returns |
Marfrig Global Foods vs. MP Materials Corp
Performance |
| Timeline |
| Marfrig Global Foods |
| MP Materials Corp |
Marfrig Global and MP Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and MP Materials
The main advantage of trading using opposite Marfrig Global and MP Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, MP Materials 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 MP Materials will offset losses from the drop in MP Materials' long position.| Marfrig Global vs. JBS SA | Marfrig Global vs. Minerva SA | Marfrig Global vs. BRF SA | Marfrig Global vs. Companhia Siderrgica Nacional |
| MP Materials vs. Taiwan Semiconductor Manufacturing | MP Materials vs. Apple Inc | MP Materials vs. Alibaba Group Holding | MP Materials vs. Banco Santander Chile |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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