Correlation Between Pilgrims Pride and JBS SA

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

Diversification Opportunities for Pilgrims Pride and JBS SA

0.53

Correlation Coefficient

Pilgrims Pride  JBS SA

Very weak diversification

The 3 months correlation between Pilgrims and JBS is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Pilgrims Pride Corp and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA 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 JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Pilgrims Pride i.e., Pilgrims Pride and JBS SA go up and down completely randomly.

Pair Corralation between Pilgrims Pride and JBS SA

Considering the 90-day investment horizon Pilgrims Pride Corp is expected to generate 1.0 times more return on investment than JBS SA. However, Pilgrims Pride is 1.0 times more volatile than JBS SA. It trades about 0.13 of its potential returns per unit of risk. JBS SA is currently generating about 0.13 per unit of risk. If you would invest  4,512  in Pilgrims Pride Corp on September 13, 2024 and sell it today you would earn a total of  470.00  from holding Pilgrims Pride Corp or generate 10.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.67%
Values	Daily Returns

Pilgrims Pride Corp  vs.  JBS SA

Pilgrims Pride Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pilgrims Pride Corp are ranked lower than 12 (%) 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.

JBS SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JBS SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, JBS SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pilgrims Pride and JBS SA

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

The idea behind Pilgrims Pride Corp and JBS SA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..