Correlation Between Dole PLC and BG Foods

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

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

Diversification Opportunities for Dole PLC and BG Foods

0.77

Correlation Coefficient

Dole PLC  BG Foods

Poor diversification

The 3 months correlation between Dole and BGS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dole PLC and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods and Dole PLC 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 Dole PLC 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 Dole PLC i.e., Dole PLC and BG Foods go up and down completely randomly.

Pair Corralation between Dole PLC and BG Foods

Given the investment horizon of 90 days Dole PLC is expected to generate 0.74 times more return on investment than BG Foods. However, Dole PLC is 1.35 times less risky than BG Foods. It trades about 0.2 of its potential returns per unit of risk. BG Foods is currently generating about -0.01 per unit of risk. If you would invest  1,178  in Dole PLC on January 31, 2024 and sell it today you would earn a total of  56.00  from holding Dole PLC or generate 4.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Dole PLC  vs.  BG Foods

Dole PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dole PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Dole PLC may actually be approaching a critical reversion point that can send shares even higher in May 2024.

BG Foods

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BG Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, BG Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dole PLC and BG Foods

The main advantage of trading using opposite Dole PLC and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dole PLC 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 Dole PLC 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.