Correlation Between General Electric and BG Foods

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

Diversification Opportunities for General Electric and BG Foods

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between General and BG Foods is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding General Electric and BG Foods Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods Holdings and General Electric 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 General Electric are associated (or correlated) with BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods Holdings has no effect on the direction of General Electric i.e., General Electric and BG Foods go up and down completely randomly.

Pair Corralation between General Electric and BG Foods

Allowing for the 90-day total investment horizon General Electric is expected to generate 0.98 times more return on investment than BG Foods. However, General Electric is 1.02 times less risky than BG Foods. It trades about -0.08 of its potential returns per unit of risk. BG Foods Holdings is currently generating about -0.09 per unit of risk. If you would invest  10,619  in General Electric on June 26, 2022 and sell it today you would lose (4,164)  from holding General Electric or give up 39.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

General Electric  vs.  BG Foods Holdings

 Performance (%) 
       Timeline  
General Electric 
General Performance
0 of 100
Over the last 90 days General Electric has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, General Electric is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

General Price Channel

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in October 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

BG Foods Price Channel

General Electric and BG Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with General Electric and BG Foods

The main advantage of trading using opposite General Electric and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Electric position performs unexpectedly, BG Foods 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 BG Foods will offset losses from the drop in BG Foods' long position.
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The idea behind General Electric and BG Foods Holdings 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.
BG Foods vs. BUSHVELD MINERALS LTD
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 Piotroski F Score module to get Piotroski F Score based on binary analysis strategy of nine different fundamentals.

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