Correlation Between Corteva and Boa Safra

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

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

Diversification Opportunities for Corteva and Boa Safra

-0.54

Correlation Coefficient

Corteva  Boa Safra

Excellent diversification

The 3 months correlation between Corteva and Boa is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Corteva and Boa Safra Sementes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boa Safra Sementes and Corteva 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 Corteva are associated (or correlated) with Boa Safra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boa Safra Sementes has no effect on the direction of Corteva i.e., Corteva and Boa Safra go up and down completely randomly.

Pair Corralation between Corteva and Boa Safra

Assuming the 90 days trading horizon Corteva is expected to generate 0.91 times more return on investment than Boa Safra. However, Corteva is 1.1 times less risky than Boa Safra. It trades about 0.03 of its potential returns per unit of risk. Boa Safra Sementes is currently generating about 0.02 per unit of risk. If you would invest  7,786  in Corteva on September 29, 2024 and sell it today you would earn a total of  1,313  from holding Corteva or generate 16.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	78.4%
Values	Daily Returns

Corteva  vs.  Boa Safra Sementes

Corteva

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Corteva are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Corteva sustained solid returns over the last few months and may actually be approaching a breakup point.

Boa Safra Sementes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boa Safra Sementes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Corteva and Boa Safra

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

The idea behind Corteva and Boa Safra Sementes 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .