Correlation Between BG Foods and Wing Yip

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

By analyzing existing cross correlation between BG Foods and Wing Yip Food, you can compare the effects of market volatilities on BG Foods and Wing Yip 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 Wing Yip. Check out your portfolio center. Please also check ongoing floating volatility patterns of BG Foods and Wing Yip.

Diversification Opportunities for BG Foods and Wing Yip

0.06

Correlation Coefficient

BG Foods  Wing Yip

Significant diversification

The 3 months correlation between BGS and Wing is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods and Wing Yip Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wing Yip Food 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 Wing Yip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wing Yip Food has no effect on the direction of BG Foods i.e., BG Foods and Wing Yip go up and down completely randomly.

Pair Corralation between BG Foods and Wing Yip

Considering the 90-day investment horizon BG Foods is expected to generate 0.35 times more return on investment than Wing Yip. However, BG Foods is 2.86 times less risky than Wing Yip. It trades about 0.17 of its potential returns per unit of risk. Wing Yip Food is currently generating about 0.06 per unit of risk. If you would invest  644.00  in BG Foods on October 6, 2024 and sell it today you would earn a total of  66.00  from holding BG Foods or generate 10.25% return on investment over 90 days.

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

BG Foods  vs.  Wing Yip Food

BG Foods

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Wing Yip Food

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wing Yip Food are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical indicators, Wing Yip reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BG Foods and Wing Yip

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

The idea behind BG Foods and Wing Yip Food 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.