Correlation Between BG Foods and GWILLI FOOD

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

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

Diversification Opportunities for BG Foods and GWILLI FOOD

-0.21

Correlation Coefficient

BG Foods  GWILLI FOOD

Very good diversification

The 3 months correlation between DHR and GWILLI is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods and GWILLI FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GWILLI FOOD and BG Foods 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 BG Foods are associated (or correlated) with GWILLI FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GWILLI FOOD has no effect on the direction of BG Foods i.e., BG Foods and GWILLI FOOD go up and down completely randomly.

Pair Corralation between BG Foods and GWILLI FOOD

Assuming the 90 days trading horizon BG Foods is expected to under-perform the GWILLI FOOD. In addition to that, BG Foods is 1.39 times more volatile than GWILLI FOOD. It trades about -0.12 of its total potential returns per unit of risk. GWILLI FOOD is currently generating about -0.01 per unit of volatility. If you would invest  1,550  in GWILLI FOOD on October 25, 2024 and sell it today you would lose (10.00) from holding GWILLI FOOD or give up 0.65% of portfolio value over 90 days.

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

BG Foods  vs.  GWILLI FOOD

BG Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BG Foods 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 rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

GWILLI FOOD

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GWILLI FOOD are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, GWILLI FOOD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BG Foods and GWILLI FOOD

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

The idea behind BG Foods and GWILLI FOOD 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.