Correlation Between BG Foods and Fresh Del

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

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

Diversification Opportunities for BG Foods and Fresh Del

-0.84

Correlation Coefficient

BG Foods  Fresh Del

Pay attention - limited upside

The 3 months correlation between BGS and Fresh is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods and Fresh Del Monte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Del Monte and BG 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 BG Foods are associated (or correlated) with Fresh Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Del Monte has no effect on the direction of BG Foods i.e., BG Foods and Fresh Del go up and down completely randomly.

Pair Corralation between BG Foods and Fresh Del

Considering the 90-day investment horizon BG Foods is expected to under-perform the Fresh Del. In addition to that, BG Foods is 2.09 times more volatile than Fresh Del Monte. It trades about -0.03 of its total potential returns per unit of risk. Fresh Del Monte is currently generating about 0.17 per unit of volatility. If you would invest  2,827  in Fresh Del Monte on September 12, 2024 and sell it today you would earn a total of  540.00  from holding Fresh Del Monte or generate 19.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

BG Foods  vs.  Fresh Del Monte

BG Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BG Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Fresh Del Monte

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Del Monte are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Fresh Del reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BG Foods and Fresh Del

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

The idea behind BG Foods and Fresh Del Monte 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.