Correlation Between Marfrig Global and First Pacific
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and First Pacific 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 First Pacific 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 First Pacific, you can compare the effects of market volatilities on Marfrig Global and First Pacific 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 First Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and First Pacific.
Diversification Opportunities for Marfrig Global and First Pacific
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marfrig and First is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and First Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Pacific 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 First Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Pacific has no effect on the direction of Marfrig Global i.e., Marfrig Global and First Pacific go up and down completely randomly.
Pair Corralation between Marfrig Global and First Pacific
Assuming the 90 days horizon Marfrig Global Foods is expected to generate 1.36 times more return on investment than First Pacific. However, Marfrig Global is 1.36 times more volatile than First Pacific. It trades about 0.43 of its potential returns per unit of risk. First Pacific is currently generating about 0.16 per unit of risk. If you would invest 266.00 in Marfrig Global Foods on September 14, 2024 and sell it today you would earn a total of 82.00 from holding Marfrig Global Foods or generate 30.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marfrig Global Foods vs. First Pacific
Performance |
| Timeline |
| Marfrig Global Foods |
| First Pacific |
Marfrig Global and First Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and First Pacific
The main advantage of trading using opposite Marfrig Global and First Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, First Pacific 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 First Pacific will offset losses from the drop in First Pacific's long position.| Marfrig Global vs. BRF SA ADR | Marfrig Global vs. Pilgrims Pride Corp | Marfrig Global vs. John B Sanfilippo | Marfrig Global vs. Seneca Foods Corp |
| First Pacific vs. BRF SA ADR | First Pacific vs. Flowers Foods | First Pacific vs. Premier Foods Plc | First Pacific vs. Torque Lifestyle Brands |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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