Correlation Between Bunzl Plc and Mission Produce

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

By analyzing existing cross correlation between Bunzl plc and Mission Produce, you can compare the effects of market volatilities on Bunzl Plc and Mission Produce 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 Bunzl Plc with a short position of Mission Produce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunzl Plc and Mission Produce.

Diversification Opportunities for Bunzl Plc and Mission Produce

0.59

Correlation Coefficient

Bunzl Plc  Mission Produce

Very weak diversification

The 3 months correlation between Bunzl and Mission is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bunzl plc and Mission Produce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mission Produce and Bunzl Plc 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 Bunzl plc are associated (or correlated) with Mission Produce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mission Produce has no effect on the direction of Bunzl Plc i.e., Bunzl Plc and Mission Produce go up and down completely randomly.

Pair Corralation between Bunzl Plc and Mission Produce

Assuming the 90 days horizon Bunzl plc is expected to generate 0.63 times more return on investment than Mission Produce. However, Bunzl plc is 1.59 times less risky than Mission Produce. It trades about -0.07 of its potential returns per unit of risk. Mission Produce is currently generating about -0.21 per unit of risk. If you would invest  2,079  in Bunzl plc on December 29, 2024 and sell it today you would lose (146.00) from holding Bunzl plc or give up 7.02% of portfolio value over 90 days.

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

Bunzl plc  vs.  Mission Produce

Bunzl plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bunzl plc 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 strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Mission Produce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mission Produce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bunzl Plc and Mission Produce

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

The idea behind Bunzl plc and Mission Produce 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 Transaction History module to view history of all your transactions and understand their impact on performance.