Correlation Between Bread Financial and JBS ON

Can any of the company-specific risk be diversified away by investing in both Bread Financial and JBS ON 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 Bread Financial and JBS ON into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bread Financial Holdings and JBS ON NM, you can compare the effects of market volatilities on Bread Financial and JBS ON 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 Bread Financial with a short position of JBS ON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bread Financial and JBS ON.

Diversification Opportunities for Bread Financial and JBS ON

0.24

Correlation Coefficient

Bread Financial  JBS ON

Modest diversification

The 3 months correlation between Bread and JBS is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bread Financial Holdings and JBS ON NM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS ON NM and Bread Financial 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 Bread Financial Holdings are associated (or correlated) with JBS ON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS ON NM has no effect on the direction of Bread Financial i.e., Bread Financial and JBS ON go up and down completely randomly.

Pair Corralation between Bread Financial and JBS ON

Assuming the 90 days trading horizon Bread Financial Holdings is expected to under-perform the JBS ON. But the stock apears to be less risky and, when comparing its historical volatility, Bread Financial Holdings is 1.03 times less risky than JBS ON. The stock trades about -0.16 of its potential returns per unit of risk. The JBS ON NM is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,717  in JBS ON NM on December 22, 2024 and sell it today you would earn a total of  488.00  from holding JBS ON NM or generate 13.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.67%
Values	Daily Returns

Bread Financial Holdings  vs.  JBS ON NM

Bread Financial Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bread Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

JBS ON NM

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JBS ON NM are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JBS ON sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bread Financial and JBS ON

The main advantage of trading using opposite Bread Financial and JBS ON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bread Financial position performs unexpectedly, JBS ON 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 JBS ON will offset losses from the drop in JBS ON's long position.

The idea behind Bread Financial Holdings and JBS ON NM pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.