Correlation Between BG Foods and High Yield
Can any of the company-specific risk be diversified away by investing in both BG Foods and High Yield 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 BG Foods and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BG Foods and High Yield Municipal Fund, you can compare the effects of market volatilities on BG Foods and High Yield 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 BG Foods with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of BG Foods and High Yield.
Diversification Opportunities for BG Foods and High Yield
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BGS and High is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and BG Foods 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 BG Foods are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of BG Foods i.e., BG Foods and High Yield go up and down completely randomly.
Pair Corralation between BG Foods and High Yield
Considering the 90-day investment horizon BG Foods is expected to generate 5.94 times more return on investment than High Yield. However, BG Foods is 5.94 times more volatile than High Yield Municipal Fund. It trades about -0.01 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about -0.32 per unit of risk. If you would invest 1,129 in BG Foods on February 1, 2024 and sell it today you would lose (5.00) from holding BG Foods or give up 0.44% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
BG Foods vs. High Yield Municipal Fund
Performance |
Timeline |
BG Foods |
High Yield Municipal |
BG Foods and High Yield Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BG Foods and High Yield
The main advantage of trading using opposite BG Foods and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BG Foods position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.BG Foods vs. Golden Agri Resources | BG Foods vs. Fresh Del Monte | BG Foods vs. Alico Inc | BG Foods vs. SW Seed Company |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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