Correlation Between Pilgrims Pride and BG Foods
Can any of the company-specific risk be diversified away by investing in both Pilgrims Pride and BG Foods 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 Pilgrims Pride and BG Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pilgrims Pride Corp and BG Foods, you can compare the effects of market volatilities on Pilgrims Pride and BG Foods 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 Pilgrims Pride with a short position of BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pilgrims Pride and BG Foods.
Diversification Opportunities for Pilgrims Pride and BG Foods
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pilgrims and BGS is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pilgrims Pride Corp and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods and Pilgrims Pride 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 Pilgrims Pride Corp are associated (or correlated) with BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of Pilgrims Pride i.e., Pilgrims Pride and BG Foods go up and down completely randomly.
Pair Corralation between Pilgrims Pride and BG Foods
Considering the 90-day investment horizon Pilgrims Pride Corp is expected to generate 0.5 times more return on investment than BG Foods. However, Pilgrims Pride Corp is 2.0 times less risky than BG Foods. It trades about 0.09 of its potential returns per unit of risk. BG Foods is currently generating about -0.01 per unit of risk. If you would invest 2,496 in Pilgrims Pride Corp on August 27, 2024 and sell it today you would earn a total of 2,675 from holding Pilgrims Pride Corp or generate 107.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pilgrims Pride Corp vs. BG Foods
Performance |
| Timeline |
| Pilgrims Pride Corp |
| BG Foods |
Pilgrims Pride and BG Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pilgrims Pride and BG Foods
The main advantage of trading using opposite Pilgrims Pride and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pilgrims Pride position performs unexpectedly, BG Foods 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 BG Foods will offset losses from the drop in BG Foods' long position.| Pilgrims Pride vs. Bellring Brands LLC | Pilgrims Pride vs. Treehouse Foods | Pilgrims Pride vs. Ingredion Incorporated | Pilgrims Pride vs. JM Smucker |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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