Correlation Between BG Foods and GRIFFIN MINING

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

By analyzing existing cross correlation between BG Foods and GRIFFIN MINING LTD, you can compare the effects of market volatilities on BG Foods and GRIFFIN MINING 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 GRIFFIN MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of BG Foods and GRIFFIN MINING.

Diversification Opportunities for BG Foods and GRIFFIN MINING

0.52

Correlation Coefficient

BG Foods  GRIFFIN MINING

Very weak diversification

The 3 months correlation between DHR and GRIFFIN is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods and GRIFFIN MINING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRIFFIN MINING LTD 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 GRIFFIN MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRIFFIN MINING LTD has no effect on the direction of BG Foods i.e., BG Foods and GRIFFIN MINING go up and down completely randomly.

Pair Corralation between BG Foods and GRIFFIN MINING

Assuming the 90 days trading horizon BG Foods is expected to generate 1.8 times more return on investment than GRIFFIN MINING. However, BG Foods is 1.8 times more volatile than GRIFFIN MINING LTD. It trades about -0.06 of its potential returns per unit of risk. GRIFFIN MINING LTD is currently generating about -0.12 per unit of risk. If you would invest  786.00  in BG Foods on October 1, 2024 and sell it today you would lose (109.00) from holding BG Foods or give up 13.87% of portfolio value over 90 days.

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

BG Foods  vs.  GRIFFIN MINING LTD

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 uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

GRIFFIN MINING LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRIFFIN MINING LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BG Foods and GRIFFIN MINING

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

The idea behind BG Foods and GRIFFIN MINING LTD 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.