Correlation Between Brasilagro Adr and Flowers Foods

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

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

Diversification Opportunities for Brasilagro Adr and Flowers Foods

-0.34

Correlation Coefficient

Brasilagro Adr  Flowers Foods

Very good diversification

The 3 months correlation between Brasilagro and Flowers is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Brasilagro Adr and Flowers Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowers Foods and Brasilagro Adr 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 Brasilagro Adr are associated (or correlated) with Flowers Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowers Foods has no effect on the direction of Brasilagro Adr i.e., Brasilagro Adr and Flowers Foods go up and down completely randomly.

Pair Corralation between Brasilagro Adr and Flowers Foods

Considering the 90-day investment horizon Brasilagro Adr is expected to generate 0.93 times more return on investment than Flowers Foods. However, Brasilagro Adr is 1.07 times less risky than Flowers Foods. It trades about 0.11 of its potential returns per unit of risk. Flowers Foods is currently generating about -0.06 per unit of risk. If you would invest  355.00  in Brasilagro Adr on December 30, 2024 and sell it today you would earn a total of  34.00  from holding Brasilagro Adr or generate 9.58% return on investment over 90 days.

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

Brasilagro Adr  vs.  Flowers Foods

Brasilagro Adr

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brasilagro Adr are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Brasilagro Adr may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Flowers Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flowers Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Brasilagro Adr and Flowers Foods

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

The idea behind Brasilagro Adr and Flowers Foods 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.