Correlation Between WH Group and BG Foods
Can any of the company-specific risk be diversified away by investing in both WH Group 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 WH Group and BG Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WH Group Limited and BG Foods, you can compare the effects of market volatilities on WH Group 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 WH Group with a short position of BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of WH Group and BG Foods.
Diversification Opportunities for WH Group and BG Foods
Very good diversification
The 3 months correlation between WHGRF and BGS is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding WH Group Limited and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods and WH Group 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 WH Group Limited 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 WH Group i.e., WH Group and BG Foods go up and down completely randomly.
Pair Corralation between WH Group and BG Foods
Assuming the 90 days horizon WH Group Limited is expected to generate 4.57 times more return on investment than BG Foods. However, WH Group is 4.57 times more volatile than BG Foods. It trades about 0.1 of its potential returns per unit of risk. BG Foods is currently generating about -0.03 per unit of risk. If you would invest 27.00 in WH Group Limited on August 31, 2024 and sell it today you would earn a total of 52.00 from holding WH Group Limited or generate 192.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 54.16% |
| Values | Daily Returns |
WH Group Limited vs. BG Foods
Performance |
| Timeline |
| WH Group Limited |
| BG Foods |
WH Group and BG Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WH Group and BG Foods
The main advantage of trading using opposite WH Group and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WH Group 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.| WH Group vs. Premier Foods Plc | WH Group vs. Torque Lifestyle Brands | WH Group vs. Naturally Splendid Enterprises | WH Group vs. Aryzta AG PK |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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