Correlation Between Nestle SA and Grupo Bimbo
Can any of the company-specific risk be diversified away by investing in both Nestle SA and Grupo Bimbo 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 Nestle SA and Grupo Bimbo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestle SA and Grupo Bimbo SAB, you can compare the effects of market volatilities on Nestle SA and Grupo Bimbo 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 Nestle SA with a short position of Grupo Bimbo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestle SA and Grupo Bimbo.
Diversification Opportunities for Nestle SA and Grupo Bimbo
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nestle and Grupo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Nestle SA and Grupo Bimbo SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Bimbo SAB and Nestle SA 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 Nestle SA are associated (or correlated) with Grupo Bimbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Bimbo SAB has no effect on the direction of Nestle SA i.e., Nestle SA and Grupo Bimbo go up and down completely randomly.
Pair Corralation between Nestle SA and Grupo Bimbo
Assuming the 90 days horizon Nestle SA is expected to generate 0.42 times more return on investment than Grupo Bimbo. However, Nestle SA is 2.4 times less risky than Grupo Bimbo. It trades about -0.08 of its potential returns per unit of risk. Grupo Bimbo SAB is currently generating about -0.25 per unit of risk. If you would invest 10,687 in Nestle SA on January 20, 2024 and sell it today you would lose (226.00) from holding Nestle SA or give up 2.11% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Nestle SA vs. Grupo Bimbo SAB
Performance |
Timeline |
Nestle SA |
Grupo Bimbo SAB |
Nestle SA and Grupo Bimbo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nestle SA and Grupo Bimbo
The main advantage of trading using opposite Nestle SA and Grupo Bimbo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestle SA position performs unexpectedly, Grupo Bimbo 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 Grupo Bimbo will offset losses from the drop in Grupo Bimbo's long position.Nestle SA vs. Kellanova | Nestle SA vs. Lancaster Colony | Nestle SA vs. The A2 Milk | Nestle SA vs. Artisan Consumer Goods |
Grupo Bimbo vs. Kellanova | Grupo Bimbo vs. Lancaster Colony | Grupo Bimbo vs. The A2 Milk | Grupo Bimbo vs. Artisan Consumer Goods |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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