Correlation Between Premier Foods and Marfrig Global
Can any of the company-specific risk be diversified away by investing in both Premier Foods and Marfrig Global 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 Premier Foods and Marfrig Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Foods Plc and Marfrig Global Foods, you can compare the effects of market volatilities on Premier Foods and Marfrig Global 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 Premier Foods with a short position of Marfrig Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Marfrig Global.
Diversification Opportunities for Premier Foods and Marfrig Global
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Premier and Marfrig is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods Plc and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods and Premier Foods 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 Premier Foods Plc are associated (or correlated) with Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Premier Foods i.e., Premier Foods and Marfrig Global go up and down completely randomly.
Pair Corralation between Premier Foods and Marfrig Global
Assuming the 90 days horizon Premier Foods Plc is expected to under-perform the Marfrig Global. But the pink sheet apears to be less risky and, when comparing its historical volatility, Premier Foods Plc is 5.32 times less risky than Marfrig Global. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Marfrig Global Foods is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 274.00 in Marfrig Global Foods on September 13, 2024 and sell it today you would earn a total of 74.00 from holding Marfrig Global Foods or generate 27.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Foods Plc vs. Marfrig Global Foods
Performance |
| Timeline |
| Premier Foods Plc |
| Marfrig Global Foods |
Premier Foods and Marfrig Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and Marfrig Global
The main advantage of trading using opposite Premier Foods and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, Marfrig Global 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 Marfrig Global will offset losses from the drop in Marfrig Global's long position.| Premier Foods vs. BRF SA ADR | Premier Foods vs. Pilgrims Pride Corp | Premier Foods vs. John B Sanfilippo | Premier Foods vs. Seneca Foods Corp |
| Marfrig Global vs. BRF SA ADR | Marfrig Global vs. Pilgrims Pride Corp | Marfrig Global vs. John B Sanfilippo | Marfrig Global vs. Seneca Foods 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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