Correlation Between BBB Foods and ATRenew
Can any of the company-specific risk be diversified away by investing in both BBB Foods and ATRenew 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 ATRenew into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and ATRenew Inc DRC, you can compare the effects of market volatilities on BBB Foods and ATRenew 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 ATRenew. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and ATRenew.
Diversification Opportunities for BBB Foods and ATRenew
Significant diversification
The 3 months correlation between BBB and ATRenew is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and ATRenew Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRenew Inc DRC 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 ATRenew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRenew Inc DRC has no effect on the direction of BBB Foods i.e., BBB Foods and ATRenew go up and down completely randomly.
Pair Corralation between BBB Foods and ATRenew
Given the investment horizon of 90 days BBB Foods is expected to under-perform the ATRenew. But the stock apears to be less risky and, when comparing its historical volatility, BBB Foods is 1.63 times less risky than ATRenew. The stock trades about -0.18 of its potential returns per unit of risk. The ATRenew Inc DRC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 262.00 in ATRenew Inc DRC on August 29, 2024 and sell it today you would earn a total of 50.00 from holding ATRenew Inc DRC or generate 19.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBB Foods vs. ATRenew Inc DRC
Performance |
| Timeline |
| BBB Foods |
| ATRenew Inc DRC |
BBB Foods and ATRenew Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and ATRenew
The main advantage of trading using opposite BBB Foods and ATRenew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, ATRenew 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 ATRenew will offset losses from the drop in ATRenew's long position.| BBB Foods vs. Innovative Food Hldg | BBB Foods vs. Calavo Growers | BBB Foods vs. The Chefs Warehouse | BBB Foods vs. AMCON Distributing |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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