Correlation Between Marfrig Global and MACYS

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

Diversification Opportunities for Marfrig Global and MACYS

-0.26

Correlation Coefficient

Marfrig Global  MACYS

Very good diversification

The 3 months correlation between Marfrig and MACYS is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and MACYS RETAIL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACYS RETAIL HLDGS 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 MACYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACYS RETAIL HLDGS has no effect on the direction of Marfrig Global i.e., Marfrig Global and MACYS go up and down completely randomly.

Pair Corralation between Marfrig Global and MACYS

Assuming the 90 days horizon Marfrig Global Foods is expected to under-perform the MACYS. In addition to that, Marfrig Global is 3.97 times more volatile than MACYS RETAIL HLDGS. It trades about -0.11 of its total potential returns per unit of risk. MACYS RETAIL HLDGS is currently generating about -0.13 per unit of volatility. If you would invest  10,297  in MACYS RETAIL HLDGS on October 4, 2024 and sell it today you would lose (312.00) from holding MACYS RETAIL HLDGS or give up 3.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Marfrig Global Foods  vs.  MACYS RETAIL HLDGS

Marfrig Global Foods

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 5 (%) 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.

MACYS RETAIL HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MACYS RETAIL HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MACYS 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 MACYS

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

The idea behind Marfrig Global Foods and MACYS RETAIL HLDGS 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.