Correlation Between BBB Foods and 06417XAA9

Can any of the company-specific risk be diversified away by investing in both BBB Foods and 06417XAA9 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 06417XAA9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BBB Foods and BNS 49608 10 JAN 25, you can compare the effects of market volatilities on BBB Foods and 06417XAA9 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 06417XAA9. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and 06417XAA9.

Diversification Opportunities for BBB Foods and 06417XAA9

0.32

Correlation Coefficient

BBB Foods  06417XAA9

Weak diversification

The 3 months correlation between BBB and 06417XAA9 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and BNS 49608 10 JAN 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNS 49608 10 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 06417XAA9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNS 49608 10 has no effect on the direction of BBB Foods i.e., BBB Foods and 06417XAA9 go up and down completely randomly.

Pair Corralation between BBB Foods and 06417XAA9

Given the investment horizon of 90 days BBB Foods is expected to under-perform the 06417XAA9. In addition to that, BBB Foods is 12.12 times more volatile than BNS 49608 10 JAN 25. It trades about -0.02 of its total potential returns per unit of risk. BNS 49608 10 JAN 25 is currently generating about -0.2 per unit of volatility. If you would invest  10,005  in BNS 49608 10 JAN 25 on September 3, 2024 and sell it today you would lose (115.00) from holding BNS 49608 10 JAN 25 or give up 1.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	39.06%
Values	Daily Returns

BBB Foods  vs.  BNS 49608 10 JAN 25

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 somewhat strong fundamental drivers, BBB Foods is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

BNS 49608 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNS 49608 10 JAN 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 06417XAA9 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BBB Foods and 06417XAA9

The main advantage of trading using opposite BBB Foods and 06417XAA9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, 06417XAA9 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 06417XAA9 will offset losses from the drop in 06417XAA9's long position.

The idea behind BBB Foods and BNS 49608 10 JAN 25 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.