Correlation Between BBB Foods and Chemours
Can any of the company-specific risk be diversified away by investing in both BBB Foods and Chemours 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 Chemours into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Chemours Co, you can compare the effects of market volatilities on BBB Foods and Chemours 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 Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Chemours.
Diversification Opportunities for BBB Foods and Chemours
Modest diversification
The 3 months correlation between BBB and Chemours is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of BBB Foods i.e., BBB Foods and Chemours go up and down completely randomly.
Pair Corralation between BBB Foods and Chemours
Given the investment horizon of 90 days BBB Foods is expected to generate 1.04 times more return on investment than Chemours. However, BBB Foods is 1.04 times more volatile than Chemours Co. It trades about -0.09 of its potential returns per unit of risk. Chemours Co is currently generating about -0.27 per unit of risk. If you would invest 2,951 in BBB Foods on November 18, 2024 and sell it today you would lose (149.00) from holding BBB Foods or give up 5.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBB Foods vs. Chemours Co
Performance |
| Timeline |
| BBB Foods |
| Chemours |
BBB Foods and Chemours Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Chemours
The main advantage of trading using opposite BBB Foods and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.| BBB Foods vs. Ryanair Holdings PLC | BBB Foods vs. Sun Country Airlines | BBB Foods vs. United Airlines Holdings | BBB Foods vs. Volaris |
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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.
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