Correlation Between Marfrig Global and Stagwell
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and Stagwell 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 Stagwell 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 Stagwell, you can compare the effects of market volatilities on Marfrig Global and Stagwell 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 Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Stagwell.
Diversification Opportunities for Marfrig Global and Stagwell
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marfrig and Stagwell is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Marfrig Global i.e., Marfrig Global and Stagwell go up and down completely randomly.
Pair Corralation between Marfrig Global and Stagwell
Assuming the 90 days horizon Marfrig Global Foods is expected to generate 1.06 times more return on investment than Stagwell. However, Marfrig Global is 1.06 times more volatile than Stagwell. It trades about 0.08 of its potential returns per unit of risk. Stagwell is currently generating about 0.07 per unit of risk. If you would invest 191.00 in Marfrig Global Foods on September 2, 2024 and sell it today you would earn a total of 114.00 from holding Marfrig Global Foods or generate 59.69% 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. Stagwell
Performance |
| Timeline |
| Marfrig Global Foods |
| Stagwell |
Marfrig Global and Stagwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and Stagwell
The main advantage of trading using opposite Marfrig Global and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell's long position.| Marfrig Global vs. The A2 Milk | Marfrig Global vs. Artisan Consumer Goods | Marfrig Global vs. General Mills |
| Stagwell vs. ADTRAN Inc | Stagwell vs. Belden Inc | Stagwell vs. ADC Therapeutics SA | Stagwell vs. Comtech Telecommunications Corp |
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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