Correlation Between Pilgrims Pride and Bunge

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

By analyzing existing cross correlation between Pilgrims Pride Corp and Bunge Limited, you can compare the effects of market volatilities on Pilgrims Pride and Bunge 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 Pilgrims Pride with a short position of Bunge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pilgrims Pride and Bunge.

Diversification Opportunities for Pilgrims Pride and Bunge

-0.72

Correlation Coefficient

Pilgrims Pride  Bunge

Pay attention - limited upside

The 3 months correlation between Pilgrims and Bunge is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pilgrims Pride Corp and Bunge Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunge Limited and Pilgrims Pride 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 Pilgrims Pride Corp are associated (or correlated) with Bunge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunge Limited has no effect on the direction of Pilgrims Pride i.e., Pilgrims Pride and Bunge go up and down completely randomly.

Pair Corralation between Pilgrims Pride and Bunge

Considering the 90-day investment horizon Pilgrims Pride Corp is expected to generate 1.02 times more return on investment than Bunge. However, Pilgrims Pride is 1.02 times more volatile than Bunge Limited. It trades about 0.09 of its potential returns per unit of risk. Bunge Limited is currently generating about 0.01 per unit of risk. If you would invest  2,453  in Pilgrims Pride Corp on August 30, 2024 and sell it today you would earn a total of  2,595  from holding Pilgrims Pride Corp or generate 105.79% return on investment over 90 days.

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

Pilgrims Pride Corp  vs.  Bunge Limited

Pilgrims Pride Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pilgrims Pride Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Pilgrims Pride may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Bunge Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bunge Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Pilgrims Pride and Bunge

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

The idea behind Pilgrims Pride Corp and Bunge 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.