Correlation Between BG Foods and Naturally Splendid

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Can any of the company-specific risk be diversified away by investing in both BG Foods and Naturally Splendid 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 BG Foods and Naturally Splendid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BG Foods and Naturally Splendid Enterprises, you can compare the effects of market volatilities on BG Foods and Naturally Splendid 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 BG Foods with a short position of Naturally Splendid. Check out your portfolio center. Please also check ongoing floating volatility patterns of BG Foods and Naturally Splendid.

Diversification Opportunities for BG Foods and Naturally Splendid

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between BGS and Naturally is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods and Naturally Splendid Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturally Splendid and BG Foods 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 BG Foods are associated (or correlated) with Naturally Splendid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturally Splendid has no effect on the direction of BG Foods i.e., BG Foods and Naturally Splendid go up and down completely randomly.

Pair Corralation between BG Foods and Naturally Splendid

If you would invest  4.00  in Naturally Splendid Enterprises on September 11, 2024 and sell it today you would earn a total of  0.00  from holding Naturally Splendid Enterprises or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BG Foods  vs.  Naturally Splendid Enterprises

 Performance 
       Timeline  
BG Foods 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days BG Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, BG Foods is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Naturally Splendid 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Naturally Splendid Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Naturally Splendid is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BG Foods and Naturally Splendid Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BG Foods and Naturally Splendid

The main advantage of trading using opposite BG Foods and Naturally Splendid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BG Foods position performs unexpectedly, Naturally Splendid 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 Naturally Splendid will offset losses from the drop in Naturally Splendid's long position.
The idea behind BG Foods and Naturally Splendid Enterprises 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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