Correlation Between BBB Foods and NESNVX

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

By analyzing existing cross correlation between BBB Foods and NESNVX 39 24 SEP 38, you can compare the effects of market volatilities on BBB Foods and NESNVX 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 NESNVX. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and NESNVX.

Diversification Opportunities for BBB Foods and NESNVX

0.6

Correlation Coefficient

BBB Foods  NESNVX

Poor diversification

The 3 months correlation between BBB and NESNVX is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and NESNVX 39 24 SEP 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESNVX 24 SEP 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 NESNVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESNVX 24 SEP has no effect on the direction of BBB Foods i.e., BBB Foods and NESNVX go up and down completely randomly.

Pair Corralation between BBB Foods and NESNVX

Given the investment horizon of 90 days BBB Foods is expected to under-perform the NESNVX. In addition to that, BBB Foods is 1.63 times more volatile than NESNVX 39 24 SEP 38. It trades about 0.0 of its total potential returns per unit of risk. NESNVX 39 24 SEP 38 is currently generating about 0.08 per unit of volatility. If you would invest  9,040  in NESNVX 39 24 SEP 38 on October 14, 2024 and sell it today you would earn a total of  466.00  from holding NESNVX 39 24 SEP 38 or generate 5.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	69.35%
Values	Daily Returns

BBB Foods  vs.  NESNVX 39 24 SEP 38

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.

NESNVX 24 SEP

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NESNVX 39 24 SEP 38 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NESNVX may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BBB Foods and NESNVX

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

The idea behind BBB Foods and NESNVX 39 24 SEP 38 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.