Correlation Between BBB Foods and California-Engels

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

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

Diversification Opportunities for BBB Foods and California-Engels

0.0

Correlation Coefficient

BBB Foods  California-Engels

Pay attention - limited upside

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

Pair Corralation between BBB Foods and California-Engels

If you would invest  1,750  in BBB Foods on October 26, 2024 and sell it today you would earn a total of  1,332  from holding BBB Foods or generate 76.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	48.49%
Values	Daily Returns

BBB Foods  vs.  California Engels Mining

BBB Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

California Engels Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days California Engels Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, California-Engels is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BBB Foods and California-Engels

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

The idea behind BBB Foods and California Engels Mining 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.