Correlation Between G Willi and Bunzl Plc

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

By analyzing existing cross correlation between G Willi Food International and Bunzl plc, you can compare the effects of market volatilities on G Willi and Bunzl Plc 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 G Willi with a short position of Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Willi and Bunzl Plc.

Diversification Opportunities for G Willi and Bunzl Plc

-0.55

Correlation Coefficient

G Willi  Bunzl Plc

Excellent diversification

The 3 months correlation between WILC and Bunzl is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding G Willi Food International and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc and G Willi 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 G Willi Food International are associated (or correlated) with Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of G Willi i.e., G Willi and Bunzl Plc go up and down completely randomly.

Pair Corralation between G Willi and Bunzl Plc

Given the investment horizon of 90 days G Willi Food International is expected to generate 2.65 times more return on investment than Bunzl Plc. However, G Willi is 2.65 times more volatile than Bunzl plc. It trades about 0.18 of its potential returns per unit of risk. Bunzl plc is currently generating about -0.03 per unit of risk. If you would invest  1,075  in G Willi Food International on September 1, 2024 and sell it today you would earn a total of  383.00  from holding G Willi Food International or generate 35.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

G Willi Food International  vs.  Bunzl plc

G Willi Food

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in G Willi Food International are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, G Willi exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bunzl plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bunzl plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Bunzl Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with G Willi and Bunzl Plc

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

The idea behind G Willi Food International and Bunzl plc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.