Correlation Between Mondelez International and Bunzl Plc

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

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

Diversification Opportunities for Mondelez International and Bunzl Plc

0.75

Correlation Coefficient

Mondelez International  Bunzl Plc

Poor diversification

The 3 months correlation between Mondelez and Bunzl is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mondelez International and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc and Mondelez International 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 Mondelez International are associated (or correlated) with Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of Mondelez International i.e., Mondelez International and Bunzl Plc go up and down completely randomly.

Pair Corralation between Mondelez International and Bunzl Plc

Given the investment horizon of 90 days Mondelez International is expected to generate 0.83 times more return on investment than Bunzl Plc. However, Mondelez International is 1.2 times less risky than Bunzl Plc. It trades about -0.36 of its potential returns per unit of risk. Bunzl plc is currently generating about -0.51 per unit of risk. If you would invest  6,262  in Mondelez International on October 12, 2024 and sell it today you would lose (433.00) from holding Mondelez International or give up 6.91% of portfolio value over 90 days.

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

Mondelez International  vs.  Bunzl plc

Mondelez International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mondelez International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bunzl plc

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mondelez International and Bunzl Plc

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

The idea behind Mondelez International and Bunzl plc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.