Correlation Between BG Foods and Corporate Office

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

By analyzing existing cross correlation between BG Foods and Corporate Office Properties, you can compare the effects of market volatilities on BG Foods and Corporate Office 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 Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of BG Foods and Corporate Office.

Diversification Opportunities for BG Foods and Corporate Office

-0.39

Correlation Coefficient

BG Foods  Corporate Office

Very good diversification

The 3 months correlation between DHR and Corporate is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of BG Foods i.e., BG Foods and Corporate Office go up and down completely randomly.

Pair Corralation between BG Foods and Corporate Office

Assuming the 90 days trading horizon BG Foods is expected to under-perform the Corporate Office. In addition to that, BG Foods is 2.52 times more volatile than Corporate Office Properties. It trades about -0.05 of its total potential returns per unit of risk. Corporate Office Properties is currently generating about 0.06 per unit of volatility. If you would invest  2,820  in Corporate Office Properties on October 4, 2024 and sell it today you would earn a total of  120.00  from holding Corporate Office Properties or generate 4.26% return on investment over 90 days.

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

BG Foods  vs.  Corporate Office Properties

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 latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Corporate Office Pro

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Office Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Corporate Office is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BG Foods and Corporate Office

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

The idea behind BG Foods and Corporate Office Properties 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.