Correlation Between Companhia Brasileira and Mission Produce

Can any of the company-specific risk be diversified away by investing in both Companhia Brasileira and Mission Produce 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 Companhia Brasileira and Mission Produce into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Companhia Brasileira De and Mission Produce, you can compare the effects of market volatilities on Companhia Brasileira and Mission Produce 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 Companhia Brasileira with a short position of Mission Produce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Brasileira and Mission Produce.

Diversification Opportunities for Companhia Brasileira and Mission Produce

-0.76

Correlation Coefficient

Companhia Brasileira  Mission Produce

Pay attention - limited upside

The 3 months correlation between Companhia and Mission is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Brasileira De and Mission Produce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mission Produce and Companhia Brasileira 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 Companhia Brasileira De are associated (or correlated) with Mission Produce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mission Produce has no effect on the direction of Companhia Brasileira i.e., Companhia Brasileira and Mission Produce go up and down completely randomly.

Pair Corralation between Companhia Brasileira and Mission Produce

Considering the 90-day investment horizon Companhia Brasileira De is expected to under-perform the Mission Produce. In addition to that, Companhia Brasileira is 8.53 times more volatile than Mission Produce. It trades about -0.24 of its total potential returns per unit of risk. Mission Produce is currently generating about 0.13 per unit of volatility. If you would invest  1,055  in Mission Produce on February 27, 2024 and sell it today you would earn a total of  170.00  from holding Mission Produce or generate 16.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	60.94%
Values	Daily Returns

Companhia Brasileira De  vs.  Mission Produce

Companhia Brasileira

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Brasileira De has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Mission Produce

Risk-Adjusted Performance

10 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mission Produce are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Mission Produce displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Companhia Brasileira and Mission Produce

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

The idea behind Companhia Brasileira De and Mission Produce 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.