Correlation Between Wing Yip and BG Foods

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

By analyzing existing cross correlation between Wing Yip Food and BG Foods, you can compare the effects of market volatilities on Wing Yip and BG Foods 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 Wing Yip with a short position of BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wing Yip and BG Foods.

Diversification Opportunities for Wing Yip and BG Foods

0.06

Correlation Coefficient

Wing Yip  BG Foods

Significant diversification

The 3 months correlation between Wing and BGS is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Wing Yip Food and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods and Wing Yip 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 Wing Yip Food are associated (or correlated) with BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of Wing Yip i.e., Wing Yip and BG Foods go up and down completely randomly.

Pair Corralation between Wing Yip and BG Foods

Given the investment horizon of 90 days Wing Yip is expected to generate 1.06 times less return on investment than BG Foods. In addition to that, Wing Yip is 2.86 times more volatile than BG Foods. It trades about 0.06 of its total potential returns per unit of risk. BG Foods is currently generating about 0.17 per unit of volatility. If you would invest  644.00  in BG Foods on October 6, 2024 and sell it today you would earn a total of  66.00  from holding BG Foods or generate 10.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Wing Yip Food  vs.  BG Foods

Wing Yip Food

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wing Yip Food are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical indicators, Wing Yip reported solid returns over the last few months and may actually be approaching a breakup point.

BG Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BG Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Wing Yip and BG Foods

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

The idea behind Wing Yip Food and BG Foods 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.