Correlation Between Marfrig Global and 126408GW7

Can any of the company-specific risk be diversified away by investing in both Marfrig Global and 126408GW7 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 126408GW7 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 CSX P 475, you can compare the effects of market volatilities on Marfrig Global and 126408GW7 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 126408GW7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and 126408GW7.

Diversification Opportunities for Marfrig Global and 126408GW7

-0.52

Correlation Coefficient

Marfrig Global  126408GW7

Excellent diversification

The 3 months correlation between Marfrig and 126408GW7 is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and CSX P 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX P 475 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 126408GW7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX P 475 has no effect on the direction of Marfrig Global i.e., Marfrig Global and 126408GW7 go up and down completely randomly.

Pair Corralation between Marfrig Global and 126408GW7

Assuming the 90 days horizon Marfrig Global Foods is expected to under-perform the 126408GW7. In addition to that, Marfrig Global is 3.62 times more volatile than CSX P 475. It trades about -0.15 of its total potential returns per unit of risk. CSX P 475 is currently generating about -0.26 per unit of volatility. If you would invest  9,604  in CSX P 475 on October 6, 2024 and sell it today you would lose (450.00) from holding CSX P 475 or give up 4.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	70.0%
Values	Daily Returns

Marfrig Global Foods  vs.  CSX P 475

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 uncertain basic indicators, Marfrig Global showed solid returns over the last few months and may actually be approaching a breakup point.

CSX P 475

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSX P 475 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 126408GW7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Marfrig Global and 126408GW7

The main advantage of trading using opposite Marfrig Global and 126408GW7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, 126408GW7 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 126408GW7 will offset losses from the drop in 126408GW7's long position.

The idea behind Marfrig Global Foods and CSX P 475 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.