Correlation Between Danone PK and Marfrig Global

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Danone PK and Marfrig Global 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 Danone PK and Marfrig Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danone PK and Marfrig Global Foods, you can compare the effects of market volatilities on Danone PK and Marfrig Global 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 Danone PK with a short position of Marfrig Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone PK and Marfrig Global.

Diversification Opportunities for Danone PK and Marfrig Global

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Danone and Marfrig is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Danone PK and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods and Danone PK 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 Danone PK are associated (or correlated) with Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Danone PK i.e., Danone PK and Marfrig Global go up and down completely randomly.

Pair Corralation between Danone PK and Marfrig Global

Assuming the 90 days horizon Danone PK is expected to generate 1.11 times less return on investment than Marfrig Global. But when comparing it to its historical volatility, Danone PK is 4.63 times less risky than Marfrig Global. It trades about 0.05 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  201.00  in Marfrig Global Foods on January 19, 2024 and sell it today you would lose (2.00) from holding Marfrig Global Foods or give up 1.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy65.43%
ValuesDaily Returns

Danone PK  vs.  Marfrig Global Foods

 Performance 
       Timeline  
Danone PK 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Danone PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Marfrig Global Foods 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Marfrig Global showed solid returns over the last few months and may actually be approaching a breakup point.

Danone PK and Marfrig Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Danone PK and Marfrig Global

The main advantage of trading using opposite Danone PK and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone PK position performs unexpectedly, Marfrig Global 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 Marfrig Global will offset losses from the drop in Marfrig Global's long position.
The idea behind Danone PK and Marfrig Global 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.
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

Other Complementary Tools

Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities