Correlation Between Bunge and Fresh Del
Can any of the company-specific risk be diversified away by investing in both Bunge and Fresh Del 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 Bunge and Fresh Del into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunge Limited and Fresh Del Monte, you can compare the effects of market volatilities on Bunge and Fresh Del 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 Bunge with a short position of Fresh Del. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and Fresh Del.
Diversification Opportunities for Bunge and Fresh Del
Poor diversification
The 3 months correlation between Bunge and Fresh is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Fresh Del Monte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Del Monte and Bunge 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 Bunge Limited are associated (or correlated) with Fresh Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Del Monte has no effect on the direction of Bunge i.e., Bunge and Fresh Del go up and down completely randomly.
Pair Corralation between Bunge and Fresh Del
Allowing for the 90-day total investment horizon Bunge Limited is expected to generate 0.73 times more return on investment than Fresh Del. However, Bunge Limited is 1.37 times less risky than Fresh Del. It trades about 0.02 of its potential returns per unit of risk. Fresh Del Monte is currently generating about 0.01 per unit of risk. If you would invest 10,625 in Bunge Limited on January 24, 2024 and sell it today you would earn a total of 350.00 from holding Bunge Limited or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.46% |
| Values | Daily Returns |
Bunge Limited vs. Fresh Del Monte
Performance |
| Timeline |
| Bunge Limited |
| Fresh Del Monte |
Bunge and Fresh Del Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunge and Fresh Del
The main advantage of trading using opposite Bunge and Fresh Del positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge position performs unexpectedly, Fresh Del 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 Fresh Del will offset losses from the drop in Fresh Del's long position.| Bunge vs. NaturalShrimp | Bunge vs. AgriFORCE Growing Systems | Bunge vs. Atlantic Sapphire ASA | Bunge vs. AgriFORCE Growing Systems |
| Fresh Del vs. NaturalShrimp | Fresh Del vs. AgriFORCE Growing Systems | Fresh Del vs. Atlantic Sapphire ASA | Fresh Del vs. AgriFORCE Growing Systems |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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