Correlation Between Alico and Bunge
Can any of the company-specific risk be diversified away by investing in both Alico and Bunge 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 Alico and Bunge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alico Inc and Bunge Limited, you can compare the effects of market volatilities on Alico and Bunge 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 Alico with a short position of Bunge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alico and Bunge.
Diversification Opportunities for Alico and Bunge
Good diversification
The 3 months correlation between Alico and Bunge is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alico Inc and Bunge Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunge Limited and Alico 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 Alico Inc are associated (or correlated) with Bunge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunge Limited has no effect on the direction of Alico i.e., Alico and Bunge go up and down completely randomly.
Pair Corralation between Alico and Bunge
Given the investment horizon of 90 days Alico Inc is expected to under-perform the Bunge. In addition to that, Alico is 1.06 times more volatile than Bunge Limited. It trades about 0.0 of its total potential returns per unit of risk. Bunge Limited is currently generating about 0.03 per unit of volatility. If you would invest 9,463 in Bunge Limited on January 19, 2024 and sell it today you would earn a total of 1,089 from holding Bunge Limited or generate 11.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Alico Inc vs. Bunge Limited
Performance |
| Timeline |
| Alico Inc |
| Bunge Limited |
Alico and Bunge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alico and Bunge
The main advantage of trading using opposite Alico and Bunge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alico position performs unexpectedly, Bunge 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 Bunge will offset losses from the drop in Bunge's long position.| Alico vs. Tyson Foods | Alico vs. Forafric Global PLC | Alico vs. Bunge Limited | Alico vs. Archer Daniels Midland |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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