Correlation Between Bunge and Dole PLC

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

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

Diversification Opportunities for Bunge and Dole PLC

-0.37

Correlation Coefficient

Bunge  Dole PLC

Very good diversification

The 3 months correlation between Bunge and Dole is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Dole PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dole PLC and Bunge 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 Bunge Limited are associated (or correlated) with Dole PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dole PLC has no effect on the direction of Bunge i.e., Bunge and Dole PLC go up and down completely randomly.

Pair Corralation between Bunge and Dole PLC

Allowing for the 90-day total investment horizon Bunge Limited is expected to under-perform the Dole PLC. In addition to that, Bunge is 1.07 times more volatile than Dole PLC. It trades about -0.04 of its total potential returns per unit of risk. Dole PLC is currently generating about 0.03 per unit of volatility. If you would invest  1,347  in Dole PLC on December 27, 2024 and sell it today you would earn a total of  34.00  from holding Dole PLC or generate 2.52% return on investment over 90 days.

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

Bunge Limited  vs.  Dole PLC

Bunge Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bunge Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Bunge is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Dole PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dole PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Dole PLC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bunge and Dole PLC

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

The idea behind Bunge Limited and Dole PLC 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.