Correlation Between Marfrig Global and PACCAR
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and PACCAR 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 PACCAR 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 PACCAR Inc, you can compare the effects of market volatilities on Marfrig Global and PACCAR 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 PACCAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and PACCAR.
Diversification Opportunities for Marfrig Global and PACCAR
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marfrig and PACCAR is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc 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 PACCAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACCAR Inc has no effect on the direction of Marfrig Global i.e., Marfrig Global and PACCAR go up and down completely randomly.
Pair Corralation between Marfrig Global and PACCAR
Assuming the 90 days horizon Marfrig Global Foods is expected to generate 1.47 times more return on investment than PACCAR. However, Marfrig Global is 1.47 times more volatile than PACCAR Inc. It trades about 0.18 of its potential returns per unit of risk. PACCAR Inc is currently generating about 0.26 per unit of risk. If you would invest 273.00 in Marfrig Global Foods on September 3, 2024 and sell it today you would earn a total of 32.00 from holding Marfrig Global Foods or generate 11.72% 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. PACCAR Inc
Performance |
| Timeline |
| Marfrig Global Foods |
| PACCAR Inc |
Marfrig Global and PACCAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and PACCAR
The main advantage of trading using opposite Marfrig Global and PACCAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, PACCAR 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 PACCAR will offset losses from the drop in PACCAR'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 |
| PACCAR vs. Manitowoc | PACCAR vs. Alamo Group | PACCAR vs. AGCO Corporation | PACCAR vs. Hyster Yale Materials Handling |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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