Correlation Between Nates Food and Grupo Bimbo

Can any of the company-specific risk be diversified away by investing in both Nates Food and Grupo Bimbo 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 Nates Food and Grupo Bimbo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nates Food Co and Grupo Bimbo SAB, you can compare the effects of market volatilities on Nates Food and Grupo Bimbo 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 Nates Food with a short position of Grupo Bimbo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nates Food and Grupo Bimbo.

Diversification Opportunities for Nates Food and Grupo Bimbo

0.0

Correlation Coefficient

Nates Food  Grupo Bimbo

Pay attention - limited upside

The 3 months correlation between Nates and Grupo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nates Food Co and Grupo Bimbo SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Bimbo SAB and Nates Food 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 Nates Food Co are associated (or correlated) with Grupo Bimbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Bimbo SAB has no effect on the direction of Nates Food i.e., Nates Food and Grupo Bimbo go up and down completely randomly.

Pair Corralation between Nates Food and Grupo Bimbo

Given the investment horizon of 90 days Nates Food Co is expected to generate 6.5 times more return on investment than Grupo Bimbo. However, Nates Food is 6.5 times more volatile than Grupo Bimbo SAB. It trades about 0.03 of its potential returns per unit of risk. Grupo Bimbo SAB is currently generating about -0.06 per unit of risk. If you would invest  0.14  in Nates Food Co on October 5, 2024 and sell it today you would lose (0.13) from holding Nates Food Co or give up 92.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	86.41%
Values	Daily Returns

Nates Food Co  vs.  Grupo Bimbo SAB

Nates Food

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Nates Food Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Nates Food is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Grupo Bimbo SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Bimbo SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nates Food and Grupo Bimbo

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

The idea behind Nates Food Co and Grupo Bimbo SAB 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.