Correlation Between Marfrig Global and Bank Of

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

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

Diversification Opportunities for Marfrig Global and Bank Of

0.91

Correlation Coefficient

Marfrig Global  Bank Of

Almost no diversification

The 3 months correlation between Marfrig and Bank is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Bank and Marfrig Global 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 Marfrig Global Foods are associated (or correlated) with Bank Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Bank has no effect on the direction of Marfrig Global i.e., Marfrig Global and Bank Of go up and down completely randomly.

Pair Corralation between Marfrig Global and Bank Of

Assuming the 90 days trading horizon Marfrig Global Foods is expected to generate 2.74 times more return on investment than Bank Of. However, Marfrig Global is 2.74 times more volatile than The Bank of. It trades about 0.07 of its potential returns per unit of risk. The Bank of is currently generating about -0.11 per unit of risk. If you would invest  1,645  in Marfrig Global Foods on October 4, 2024 and sell it today you would earn a total of  58.00  from holding Marfrig Global Foods or generate 3.53% return on investment over 90 days.

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

Marfrig Global Foods  vs.  The Bank of

Marfrig Global Foods

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marfrig Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

The Bank

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Bank Of sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marfrig Global and Bank Of

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

The idea behind Marfrig Global Foods and The Bank of 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.