Correlation Between Grupo Bimbo and Simply Good

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

Diversification Opportunities for Grupo Bimbo and Simply Good

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Grupo and Simply is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bimbo SAB and Simply Good Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Good Foods and Grupo Bimbo 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 Grupo Bimbo SAB are associated (or correlated) with Simply Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Good Foods has no effect on the direction of Grupo Bimbo i.e., Grupo Bimbo and Simply Good go up and down completely randomly.

Pair Corralation between Grupo Bimbo and Simply Good

Assuming the 90 days horizon Grupo Bimbo SAB is expected to generate 2.74 times more return on investment than Simply Good. However, Grupo Bimbo is 2.74 times more volatile than Simply Good Foods. It trades about 0.11 of its potential returns per unit of risk. Simply Good Foods is currently generating about 0.06 per unit of risk. If you would invest  415.00  in Grupo Bimbo SAB on September 10, 2022 and sell it today you would earn a total of  39.00  from holding Grupo Bimbo SAB or generate 9.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Grupo Bimbo SAB  vs.  Simply Good Foods

 Performance (%) 
       Timeline  
Grupo Bimbo SAB 
Grupo Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Bimbo SAB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Grupo Bimbo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Grupo Price Channel

Simply Good Foods 
Simply Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Simply Good Foods are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Simply Good revealed solid returns over the last few months and may actually be approaching a breakup point.

Simply Price Channel

Grupo Bimbo and Simply Good Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Bimbo and Simply Good

The main advantage of trading using opposite Grupo Bimbo and Simply Good positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Bimbo position performs unexpectedly, Simply Good 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 Simply Good will offset losses from the drop in Simply Good's long position.
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The idea behind Grupo Bimbo SAB and Simply Good Foods 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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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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