Correlation Between Pilgrims Pride and Branded Legacy

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

Diversification Opportunities for Pilgrims Pride and Branded Legacy

-0.64

Correlation Coefficient

Pilgrims Pride  Branded Legacy

Excellent diversification

The 3 months correlation between Pilgrims and Branded is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pilgrims Pride Corp and Branded Legacy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Branded Legacy 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 Branded Legacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Branded Legacy has no effect on the direction of Pilgrims Pride i.e., Pilgrims Pride and Branded Legacy go up and down completely randomly.

Pair Corralation between Pilgrims Pride and Branded Legacy

Considering the 90-day investment horizon Pilgrims Pride is expected to generate 9.89 times less return on investment than Branded Legacy. But when comparing it to its historical volatility, Pilgrims Pride Corp is 15.33 times less risky than Branded Legacy. It trades about 0.13 of its potential returns per unit of risk. Branded Legacy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.20  in Branded Legacy on September 12, 2024 and sell it today you would lose (0.15) from holding Branded Legacy or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.7%
Values	Daily Returns

Pilgrims Pride Corp  vs.  Branded Legacy

Pilgrims Pride Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pilgrims Pride Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Pilgrims Pride exhibited solid returns over the last few months and may actually be approaching a breakup point.

Branded Legacy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Branded Legacy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pilgrims Pride and Branded Legacy

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

The idea behind Pilgrims Pride Corp and Branded Legacy 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.