Correlation Between Laird Superfood and Bunge

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

By analyzing existing cross correlation between Laird Superfood and Bunge Limited, you can compare the effects of market volatilities on Laird Superfood and Bunge 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 Laird Superfood with a short position of Bunge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laird Superfood and Bunge.

Diversification Opportunities for Laird Superfood and Bunge

-0.82

Correlation Coefficient

Laird Superfood  Bunge

Pay attention - limited upside

The 3 months correlation between Laird and Bunge is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Laird Superfood and Bunge Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunge Limited and Laird Superfood 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 Laird Superfood are associated (or correlated) with Bunge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunge Limited has no effect on the direction of Laird Superfood i.e., Laird Superfood and Bunge go up and down completely randomly.

Pair Corralation between Laird Superfood and Bunge

Considering the 90-day investment horizon Laird Superfood is expected to generate 4.35 times more return on investment than Bunge. However, Laird Superfood is 4.35 times more volatile than Bunge Limited. It trades about 0.25 of its potential returns per unit of risk. Bunge Limited is currently generating about -0.09 per unit of risk. If you would invest  373.00  in Laird Superfood on September 1, 2024 and sell it today you would earn a total of  533.00  from holding Laird Superfood or generate 142.9% return on investment over 90 days.

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

Laird Superfood  vs.  Bunge Limited

Laird Superfood

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Laird Superfood are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Laird Superfood reported solid returns over the last few months and may actually be approaching a breakup point.

Bunge Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bunge Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental 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 Laird Superfood and Bunge

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

The idea behind Laird Superfood and Bunge Limited 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 Stocks Directory module to find actively traded stocks across global markets.