Correlation Between Marfrig Global and Corteva

Can any of the company-specific risk be diversified away by investing in both Marfrig Global and Corteva 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 Corteva 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 Corteva, you can compare the effects of market volatilities on Marfrig Global and Corteva 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 Corteva. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Corteva.

Diversification Opportunities for Marfrig Global and Corteva

0.74

Correlation Coefficient

Marfrig Global  Corteva

Poor diversification

The 3 months correlation between Marfrig and Corteva is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Corteva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corteva 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 Corteva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corteva has no effect on the direction of Marfrig Global i.e., Marfrig Global and Corteva go up and down completely randomly.

Pair Corralation between Marfrig Global and Corteva

Assuming the 90 days trading horizon Marfrig Global Foods is expected to generate 1.63 times more return on investment than Corteva. However, Marfrig Global is 1.63 times more volatile than Corteva. It trades about 0.13 of its potential returns per unit of risk. Corteva is currently generating about 0.09 per unit of risk. If you would invest  1,236  in Marfrig Global Foods on October 24, 2024 and sell it today you would earn a total of  259.00  from holding Marfrig Global Foods or generate 20.95% return on investment over 90 days.

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

Marfrig Global Foods  vs.  Corteva

Marfrig Global Foods

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 10 (%) 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.

Corteva

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corteva are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Corteva may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Marfrig Global and Corteva

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

The idea behind Marfrig Global Foods and Corteva 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 Global Correlations module to find global opportunities by holding instruments from different markets.