Correlation Between BG Foods and Better Choice

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Can any of the company-specific risk be diversified away by investing in both BG Foods and Better Choice 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 Better Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BG Foods Holdings and Better Choice, you can compare the effects of market volatilities on BG Foods and Better Choice 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 Better Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of BG Foods and Better Choice.

Diversification Opportunities for BG Foods and Better Choice

  Correlation Coefficient

Very good diversification

The 3 months correlation between BG Foods and Better is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods Holdings and Better Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Choice 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 Holdings are associated (or correlated) with Better Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Choice has no effect on the direction of BG Foods i.e., BG Foods and Better Choice go up and down completely randomly.

Pair Corralation between BG Foods and Better Choice

Considering the 90-day investment horizon BG Foods Holdings is expected to under-perform the Better Choice. But the stock apears to be less risky and, when comparing its historical volatility, BG Foods Holdings is 2.57 times less risky than Better Choice. The stock trades about -0.03 of its potential returns per unit of risk. The Better Choice is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  200.00  in Better Choice on May 14, 2022 and sell it today you would earn a total of  45.00  from holding Better Choice or generate 22.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
ValuesDaily Returns

BG Foods Holdings  vs.  Better Choice

 Performance (%) 
BG Foods Holdings 
BG Foods Performance
0 of 100
Over the last 90 days BG Foods Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, BG Foods is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

BG Foods Price Channel

Better Choice 
Better Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Better Choice are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Better Choice reported solid returns over the last few months and may actually be approaching a breakup point.

Better Price Channel

BG Foods and Better Choice Volatility Contrast

   Predicted Return Density   

Pair Trading with BG Foods and Better Choice

The main advantage of trading using opposite BG Foods and Better Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BG Foods position performs unexpectedly, Better Choice 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 Better Choice will offset losses from the drop in Better Choice's long position.
The idea behind BG Foods Holdings and Better Choice 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.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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