Correlation Between United Guardian and BG Foods
Can any of the company-specific risk be diversified away by investing in both United Guardian 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 United Guardian and BG Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Guardian and BG Foods, you can compare the effects of market volatilities on United Guardian 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 United Guardian with a short position of BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Guardian and BG Foods.
Diversification Opportunities for United Guardian and BG Foods
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and BGS is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods and United Guardian 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 United Guardian 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 United Guardian i.e., United Guardian and BG Foods go up and down completely randomly.
Pair Corralation between United Guardian and BG Foods
Allowing for the 90-day total investment horizon United Guardian is expected to generate 1.0 times more return on investment than BG Foods. However, United Guardian is 1.0 times less risky than BG Foods. It trades about 0.02 of its potential returns per unit of risk. BG Foods is currently generating about -0.03 per unit of risk. If you would invest 990.00 in United Guardian on November 1, 2024 and sell it today you would earn a total of 144.00 from holding United Guardian or generate 14.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Guardian vs. BG Foods
Performance |
| Timeline |
| United Guardian |
| BG Foods |
United Guardian and BG Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Guardian and BG Foods
The main advantage of trading using opposite United Guardian and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Guardian 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.| United Guardian vs. Utah Medical Products | United Guardian vs. Union Bankshares | United Guardian vs. Unity Bancorp |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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