Correlation Between Bunge and Franklin Covey

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

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

Diversification Opportunities for Bunge and Franklin Covey

0.34

Correlation Coefficient

Bunge  Franklin Covey

Weak diversification

The 3 months correlation between Bunge and Franklin is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Franklin Covey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Covey 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 Franklin Covey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Covey has no effect on the direction of Bunge i.e., Bunge and Franklin Covey go up and down completely randomly.

Pair Corralation between Bunge and Franklin Covey

Allowing for the 90-day total investment horizon Bunge Limited is expected to under-perform the Franklin Covey. But the stock apears to be less risky and, when comparing its historical volatility, Bunge Limited is 1.73 times less risky than Franklin Covey. The stock trades about -0.09 of its potential returns per unit of risk. The Franklin Covey is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,978  in Franklin Covey on September 3, 2024 and sell it today you would lose (340.00) from holding Franklin Covey or give up 8.55% of portfolio value over 90 days.

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

Bunge Limited  vs.  Franklin Covey

Bunge Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bunge Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Franklin Covey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Covey has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Bunge and Franklin Covey

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

The idea behind Bunge Limited and Franklin Covey 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.