Correlation Between Beyond Meat and Corteva

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

By analyzing existing cross correlation between Beyond Meat and Corteva, you can compare the effects of market volatilities on Beyond Meat and Corteva 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 Beyond Meat with a short position of Corteva. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beyond Meat and Corteva.

Diversification Opportunities for Beyond Meat and Corteva

0.55

Correlation Coefficient

Beyond Meat  Corteva

Very weak diversification

The 3 months correlation between Beyond and Corteva is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Meat and Corteva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corteva and Beyond Meat 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 Beyond Meat are associated (or correlated) with Corteva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corteva has no effect on the direction of Beyond Meat i.e., Beyond Meat and Corteva go up and down completely randomly.

Pair Corralation between Beyond Meat and Corteva

Assuming the 90 days trading horizon Beyond Meat is expected to under-perform the Corteva. In addition to that, Beyond Meat is 3.1 times more volatile than Corteva. It trades about -0.03 of its total potential returns per unit of risk. Corteva is currently generating about -0.03 per unit of volatility. If you would invest  9,099  in Corteva on December 24, 2024 and sell it today you would lose (279.00) from holding Corteva or give up 3.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Beyond Meat  vs.  Corteva

Beyond Meat

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beyond Meat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Corteva

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corteva has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Corteva is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Beyond Meat and Corteva

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

The idea behind Beyond Meat and Corteva 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.