Correlation Between State Bank and BG Foods
Can any of the company-specific risk be diversified away by investing in both State Bank 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 State Bank and BG Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Bank of and BG Foods, you can compare the effects of market volatilities on State Bank 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 State Bank with a short position of BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and BG Foods.
Diversification Opportunities for State Bank and BG Foods
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between State and DHR is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods and State Bank 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 State Bank of 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 State Bank i.e., State Bank and BG Foods go up and down completely randomly.
Pair Corralation between State Bank and BG Foods
Assuming the 90 days horizon State Bank of is expected to under-perform the BG Foods. But the stock apears to be less risky and, when comparing its historical volatility, State Bank of is 2.37 times less risky than BG Foods. The stock trades about -0.25 of its potential returns per unit of risk. The BG Foods is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 578.00 in BG Foods on December 8, 2024 and sell it today you would earn a total of 52.00 from holding BG Foods or generate 9.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
State Bank of vs. BG Foods
Performance |
| Timeline |
| State Bank |
| BG Foods |
State Bank and BG Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and BG Foods
The main advantage of trading using opposite State Bank and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank 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.| State Bank vs. MAGNUM MINING EXP | State Bank vs. Yanzhou Coal Mining | State Bank vs. Globex Mining Enterprises | State Bank vs. GRIFFIN MINING LTD |
| BG Foods vs. Auto Trader Group | BG Foods vs. NTG Nordic Transport | BG Foods vs. DICKS Sporting Goods | BG Foods vs. Carsales |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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