Correlation Between Grupo Bimbo and Glanbia Plc

Can any of the company-specific risk be diversified away by investing in both Grupo Bimbo and Glanbia 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 Grupo Bimbo and Glanbia Plc 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 Glanbia plc, you can compare the effects of market volatilities on Grupo Bimbo and Glanbia 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 Grupo Bimbo with a short position of Glanbia Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Bimbo and Glanbia Plc.

Diversification Opportunities for Grupo Bimbo and Glanbia Plc

0.85

Correlation Coefficient

Grupo Bimbo  Glanbia Plc

Very poor diversification

The 3 months correlation between Grupo and Glanbia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bimbo SAB and Glanbia plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glanbia plc 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 Glanbia Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glanbia plc has no effect on the direction of Grupo Bimbo i.e., Grupo Bimbo and Glanbia Plc go up and down completely randomly.

Pair Corralation between Grupo Bimbo and Glanbia Plc

Assuming the 90 days horizon Grupo Bimbo SAB is expected to under-perform the Glanbia Plc. In addition to that, Grupo Bimbo is 1.48 times more volatile than Glanbia plc. It trades about -0.18 of its total potential returns per unit of risk. Glanbia plc is currently generating about -0.17 per unit of volatility. If you would invest  1,799  in Glanbia plc on September 20, 2024 and sell it today you would lose (319.00) from holding Glanbia plc or give up 17.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Grupo Bimbo SAB  vs.  Glanbia plc

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.

Glanbia plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glanbia plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Grupo Bimbo and Glanbia Plc

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

The idea behind Grupo Bimbo SAB and Glanbia 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.

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.