Correlation Between NYSE Composite and Marfrig Global

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

Diversification Opportunities for NYSE Composite and Marfrig Global

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between NYSE and Marfrig is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Marfrig Global go up and down completely randomly.
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Pair Corralation between NYSE Composite and Marfrig Global

Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.26 times more return on investment than Marfrig Global. However, NYSE Composite is 3.82 times less risky than Marfrig Global. It trades about 0.04 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about 0.0 per unit of risk. If you would invest  1,582,705  in NYSE Composite on February 17, 2024 and sell it today you would earn a total of  256,121  from holding NYSE Composite or generate 16.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

NYSE Composite  vs.  Marfrig Global Foods

 Performance 
       Timeline  

NYSE Composite and Marfrig Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NYSE Composite and Marfrig Global

The main advantage of trading using opposite NYSE Composite and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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 NYSE Composite 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.
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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