Correlation Between Grupo Bimbo and Element Nutritional

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

By analyzing existing cross correlation between Grupo Bimbo SAB and Element Nutritional Sciences, you can compare the effects of market volatilities on Grupo Bimbo and Element Nutritional 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 Grupo Bimbo with a short position of Element Nutritional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Bimbo and Element Nutritional.

Diversification Opportunities for Grupo Bimbo and Element Nutritional

-0.82

Correlation Coefficient

Grupo Bimbo  Element Nutritional

Pay attention - limited upside

The 3 months correlation between Grupo and Element is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bimbo SAB and Element Nutritional Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Nutritional and Grupo Bimbo 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 Grupo Bimbo SAB are associated (or correlated) with Element Nutritional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Nutritional has no effect on the direction of Grupo Bimbo i.e., Grupo Bimbo and Element Nutritional go up and down completely randomly.

Pair Corralation between Grupo Bimbo and Element Nutritional

If you would invest  16.00  in Element Nutritional Sciences on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Element Nutritional Sciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.54%
Values	Daily Returns

Grupo Bimbo SAB  vs.  Element Nutritional Sciences

Grupo Bimbo SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Bimbo SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Element Nutritional

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Grupo Bimbo and Element Nutritional

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

The idea behind Grupo Bimbo SAB and Element Nutritional Sciences 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.