Correlation Between Marfrig Global and Century Aluminum
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and Century Aluminum 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 Marfrig Global and Century Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marfrig Global Foods and Century Aluminum, you can compare the effects of market volatilities on Marfrig Global and Century Aluminum 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 Marfrig Global with a short position of Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Century Aluminum.
Diversification Opportunities for Marfrig Global and Century Aluminum
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Marfrig and Century is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum and Marfrig Global 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 Marfrig Global Foods are associated (or correlated) with Century Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Aluminum has no effect on the direction of Marfrig Global i.e., Marfrig Global and Century Aluminum go up and down completely randomly.
Pair Corralation between Marfrig Global and Century Aluminum
Assuming the 90 days horizon Marfrig Global Foods is expected to generate 1.79 times more return on investment than Century Aluminum. However, Marfrig Global is 1.79 times more volatile than Century Aluminum. It trades about -0.09 of its potential returns per unit of risk. Century Aluminum is currently generating about -0.45 per unit of risk. If you would invest 305.00 in Marfrig Global Foods on September 25, 2024 and sell it today you would lose (31.00) from holding Marfrig Global Foods or give up 10.16% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Marfrig Global Foods vs. Century Aluminum
Performance |
Timeline |
Marfrig Global Foods |
Century Aluminum |
Marfrig Global and Century Aluminum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Marfrig Global and Century Aluminum
The main advantage of trading using opposite Marfrig Global and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, Century Aluminum 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 Century Aluminum will offset losses from the drop in Century Aluminum's long position.Marfrig Global vs. BRF SA ADR | Marfrig Global vs. Pilgrims Pride Corp | Marfrig Global vs. John B Sanfilippo | Marfrig Global vs. Seneca Foods Corp |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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