Correlation Between BRC and JBS SA

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

By analyzing existing cross correlation between BRC Inc and JBS SA, you can compare the effects of market volatilities on BRC and JBS SA 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 BRC with a short position of JBS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRC and JBS SA.

Diversification Opportunities for BRC and JBS SA

0.4

Correlation Coefficient

BRC  JBS SA

Very weak diversification

The 3 months correlation between BRC and JBS is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BRC Inc and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA and BRC 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 BRC Inc are associated (or correlated) with JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of BRC i.e., BRC and JBS SA go up and down completely randomly.

Pair Corralation between BRC and JBS SA

Given the investment horizon of 90 days BRC Inc is expected to under-perform the JBS SA. But the stock apears to be less risky and, when comparing its historical volatility, BRC Inc is 1.36 times less risky than JBS SA. The stock trades about -0.12 of its potential returns per unit of risk. The JBS SA is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,230  in JBS SA on November 28, 2024 and sell it today you would lose (152.00) from holding JBS SA or give up 12.36% of portfolio value over 90 days.

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

BRC Inc  vs.  JBS SA

BRC Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days BRC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

JBS SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days JBS SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with BRC and JBS SA

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

The idea behind BRC Inc and JBS SA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.