Correlation Between BBB Foods and BRC
Can any of the company-specific risk be diversified away by investing in both BBB Foods and BRC 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 BBB Foods and BRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and BRC Inc, you can compare the effects of market volatilities on BBB Foods and BRC 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 BBB Foods with a short position of BRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and BRC.
Diversification Opportunities for BBB Foods and BRC
Modest diversification
The 3 months correlation between BBB and BRC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and BRC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRC Inc and BBB 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 BBB Foods are associated (or correlated) with BRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRC Inc has no effect on the direction of BBB Foods i.e., BBB Foods and BRC go up and down completely randomly.
Pair Corralation between BBB Foods and BRC
Given the investment horizon of 90 days BBB Foods is expected to generate 0.63 times more return on investment than BRC. However, BBB Foods is 1.59 times less risky than BRC. It trades about 0.09 of its potential returns per unit of risk. BRC Inc is currently generating about 0.02 per unit of risk. If you would invest 1,750 in BBB Foods on October 25, 2024 and sell it today you would earn a total of 1,275 from holding BBB Foods or generate 72.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 77.92% |
| Values | Daily Returns |
BBB Foods vs. BRC Inc
Performance |
| Timeline |
| BBB Foods |
| BRC Inc |
BBB Foods and BRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and BRC
The main advantage of trading using opposite BBB Foods and BRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, BRC 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 BRC will offset losses from the drop in BRC's long position.| BBB Foods vs. East Africa Metals | BBB Foods vs. Ihuman Inc | BBB Foods vs. Park Electrochemical | BBB Foods vs. Afya |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Global Correlations Find global opportunities by holding instruments from different markets |