Correlation Between Bon Natural and BG Foods
Can any of the company-specific risk be diversified away by investing in both Bon Natural and BG Foods 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 Bon Natural and BG Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bon Natural Life and BG Foods, you can compare the effects of market volatilities on Bon Natural and BG Foods 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 Bon Natural with a short position of BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bon Natural and BG Foods.
Diversification Opportunities for Bon Natural and BG Foods
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bon and BGS is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bon Natural Life and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods and Bon Natural 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 Bon Natural Life are associated (or correlated) with BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of Bon Natural i.e., Bon Natural and BG Foods go up and down completely randomly.
Pair Corralation between Bon Natural and BG Foods
Considering the 90-day investment horizon Bon Natural Life is expected to generate 3.22 times more return on investment than BG Foods. However, Bon Natural is 3.22 times more volatile than BG Foods. It trades about 0.06 of its potential returns per unit of risk. BG Foods is currently generating about -0.23 per unit of risk. If you would invest 160.00 in Bon Natural Life on October 12, 2024 and sell it today you would earn a total of 7.00 from holding Bon Natural Life or generate 4.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Bon Natural Life vs. BG Foods
Performance |
Timeline |
Bon Natural Life |
BG Foods |
Bon Natural and BG Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bon Natural and BG Foods
The main advantage of trading using opposite Bon Natural and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bon Natural position performs unexpectedly, BG Foods 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 BG Foods will offset losses from the drop in BG Foods' long position.Bon Natural vs. Grand Havana | Bon Natural vs. Real Good Food | Bon Natural vs. Central Garden Pet | Bon Natural vs. Natures Sunshine Products |
Check out your portfolio center.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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