Correlation Between Marfrig Global and JPM P

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

Diversification Opportunities for Marfrig Global and JPM P

-0.47

Correlation Coefficient

Marfrig Global  JPM P

Very good diversification

The 3 months correlation between Marfrig and JPM is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and JPM P J in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM P J 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 JPM P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM P J has no effect on the direction of Marfrig Global i.e., Marfrig Global and JPM P go up and down completely randomly.

Pair Corralation between Marfrig Global and JPM P

Assuming the 90 days horizon Marfrig Global Foods is expected to generate 4.58 times more return on investment than JPM P. However, Marfrig Global is 4.58 times more volatile than JPM P J. It trades about 0.0 of its potential returns per unit of risk. JPM P J is currently generating about -0.18 per unit of risk. If you would invest  270.00  in Marfrig Global Foods on October 6, 2024 and sell it today you would lose (9.00) from holding Marfrig Global Foods or give up 3.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Marfrig Global Foods  vs.  JPM P J

Marfrig Global Foods

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Marfrig Global showed solid returns over the last few months and may actually be approaching a breakup point.

JPM P J

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPM P J has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Preferred Stock's forward-looking indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Pair Trading with Marfrig Global and JPM P

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

The idea behind Marfrig Global Foods and JPM P J 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.