Correlation Between Westrock Coffee and BRF SA
Can any of the company-specific risk be diversified away by investing in both Westrock Coffee and BRF SA 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 Westrock Coffee and BRF SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westrock Coffee and BRF SA ADR, you can compare the effects of market volatilities on Westrock Coffee and BRF SA 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 Westrock Coffee with a short position of BRF SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westrock Coffee and BRF SA.
Diversification Opportunities for Westrock Coffee and BRF SA
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westrock and BRF is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and BRF SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRF SA ADR and Westrock Coffee 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 Westrock Coffee are associated (or correlated) with BRF SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRF SA ADR has no effect on the direction of Westrock Coffee i.e., Westrock Coffee and BRF SA go up and down completely randomly.
Pair Corralation between Westrock Coffee and BRF SA
Given the investment horizon of 90 days Westrock Coffee is expected to under-perform the BRF SA. But the stock apears to be less risky and, when comparing its historical volatility, Westrock Coffee is 2.44 times less risky than BRF SA. The stock trades about -0.06 of its potential returns per unit of risk. The BRF SA ADR is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 315.00 in BRF SA ADR on February 1, 2024 and sell it today you would earn a total of 25.00 from holding BRF SA ADR or generate 7.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Westrock Coffee vs. BRF SA ADR
Performance |
Timeline |
Westrock Coffee |
BRF SA ADR |
Westrock Coffee and BRF SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Westrock Coffee and BRF SA
The main advantage of trading using opposite Westrock Coffee and BRF SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee position performs unexpectedly, BRF SA 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 BRF SA will offset losses from the drop in BRF SA's long position.Westrock Coffee vs. Golden Agri Resources | Westrock Coffee vs. Fresh Del Monte | Westrock Coffee vs. Alico Inc | Westrock Coffee vs. SW Seed Company |
BRF SA vs. Golden Agri Resources | BRF SA vs. Fresh Del Monte | BRF SA vs. Alico Inc | BRF SA vs. SW Seed Company |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |