Correlation Between Beyond Meat and JBS SA

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

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

Diversification Opportunities for Beyond Meat and JBS SA

-0.52

Correlation Coefficient

Beyond Meat  JBS SA

Excellent diversification

The 3 months correlation between Beyond and JBS is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Meat and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA 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 JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Beyond Meat i.e., Beyond Meat and JBS SA go up and down completely randomly.

Pair Corralation between Beyond Meat and JBS SA

Assuming the 90 days trading horizon Beyond Meat is expected to under-perform the JBS SA. In addition to that, Beyond Meat is 2.1 times more volatile than JBS SA. It trades about -0.03 of its total potential returns per unit of risk. JBS SA is currently generating about 0.11 per unit of volatility. If you would invest  3,338  in JBS SA on September 4, 2024 and sell it today you would earn a total of  425.00  from holding JBS SA or generate 12.73% return on investment over 90 days.

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

Beyond Meat  vs.  JBS SA

Beyond Meat

Risk-Adjusted Performance

0 of 100

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.

JBS SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JBS SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, JBS SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beyond Meat and JBS SA

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

The idea behind Beyond Meat and JBS SA 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.