Correlation Between Pinterest and Marfrig Global

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

By analyzing existing cross correlation between Pinterest and Marfrig Global Foods, you can compare the effects of market volatilities on Pinterest and Marfrig Global 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 Pinterest with a short position of Marfrig Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinterest and Marfrig Global.

Diversification Opportunities for Pinterest and Marfrig Global

-0.43

Correlation Coefficient

Pinterest  Marfrig Global

Very good diversification

The 3 months correlation between Pinterest and Marfrig is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods and Pinterest 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 Pinterest are associated (or correlated) with Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Pinterest i.e., Pinterest and Marfrig Global go up and down completely randomly.

Pair Corralation between Pinterest and Marfrig Global

Given the investment horizon of 90 days Pinterest is expected to generate 0.51 times more return on investment than Marfrig Global. However, Pinterest is 1.95 times less risky than Marfrig Global. It trades about 0.02 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about -0.14 per unit of risk. If you would invest  2,931  in Pinterest on September 22, 2024 and sell it today you would earn a total of  18.00  from holding Pinterest or generate 0.61% return on investment over 90 days.

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

Pinterest  vs.  Marfrig Global Foods

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pinterest is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Marfrig Global Foods

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Marfrig Global is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pinterest and Marfrig Global

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

The idea behind Pinterest and Marfrig Global Foods 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.