Correlation Between ConAgra Foods and Bon Natural

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

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

Diversification Opportunities for ConAgra Foods and Bon Natural

0.31

Correlation Coefficient

ConAgra Foods  Bon Natural

Weak diversification

The 3 months correlation between ConAgra and Bon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ConAgra Foods and Bon Natural Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bon Natural Life and ConAgra 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 ConAgra Foods are associated (or correlated) with Bon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bon Natural Life has no effect on the direction of ConAgra Foods i.e., ConAgra Foods and Bon Natural go up and down completely randomly.

Pair Corralation between ConAgra Foods and Bon Natural

Considering the 90-day investment horizon ConAgra Foods is expected to generate 0.32 times more return on investment than Bon Natural. However, ConAgra Foods is 3.17 times less risky than Bon Natural. It trades about -0.04 of its potential returns per unit of risk. Bon Natural Life is currently generating about -0.09 per unit of risk. If you would invest  2,979  in ConAgra Foods on August 9, 2024 and sell it today you would lose (148.00) from holding ConAgra Foods or give up 4.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ConAgra Foods  vs.  Bon Natural Life

ConAgra Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ConAgra Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ConAgra Foods is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Bon Natural Life

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bon Natural Life has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with ConAgra Foods and Bon Natural

The main advantage of trading using opposite ConAgra Foods and Bon Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConAgra Foods position performs unexpectedly, Bon Natural 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 Bon Natural will offset losses from the drop in Bon Natural's long position.

The idea behind ConAgra Foods and Bon Natural Life 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .