Correlation Between Marfrig Global and NFT

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

Diversification Opportunities for Marfrig Global and NFT

-0.68

Correlation Coefficient

Marfrig Global  NFT

Excellent diversification

The 3 months correlation between Marfrig and NFT is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and NFT Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFT Limited 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 NFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFT Limited has no effect on the direction of Marfrig Global i.e., Marfrig Global and NFT go up and down completely randomly.

Pair Corralation between Marfrig Global and NFT

Assuming the 90 days horizon Marfrig Global Foods is expected to generate 0.32 times more return on investment than NFT. However, Marfrig Global Foods is 3.09 times less risky than NFT. It trades about 0.05 of its potential returns per unit of risk. NFT Limited is currently generating about 0.01 per unit of risk. If you would invest  191.00  in Marfrig Global Foods on October 7, 2024 and sell it today you would earn a total of  70.00  from holding Marfrig Global Foods or generate 36.65% return on investment over 90 days.

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

Marfrig Global Foods  vs.  NFT Limited

Marfrig Global Foods

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Marfrig Global showed solid returns over the last few months and may actually be approaching a breakup point.

NFT Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NFT Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Marfrig Global and NFT

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

The idea behind Marfrig Global Foods and NFT Limited 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.