Correlation Between Marfrig Global and Microchip Technology

Can any of the company-specific risk be diversified away by investing in both Marfrig Global and Microchip Technology 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 Microchip Technology 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 Microchip Technology Incorporated, you can compare the effects of market volatilities on Marfrig Global and Microchip Technology 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 Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Microchip Technology.

Diversification Opportunities for Marfrig Global and Microchip Technology

0.52

Correlation Coefficient

Marfrig Global  Microchip Technology

Very weak diversification

The 3 months correlation between Marfrig and Microchip is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Microchip Technology Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Marfrig Global i.e., Marfrig Global and Microchip Technology go up and down completely randomly.

Pair Corralation between Marfrig Global and Microchip Technology

Assuming the 90 days trading horizon Marfrig Global is expected to generate 5.46 times less return on investment than Microchip Technology. In addition to that, Marfrig Global is 1.3 times more volatile than Microchip Technology Incorporated. It trades about 0.05 of its total potential returns per unit of risk. Microchip Technology Incorporated is currently generating about 0.33 per unit of volatility. If you would invest  11,597  in Microchip Technology Incorporated on April 22, 2025 and sell it today you would earn a total of  9,214  from holding Microchip Technology Incorporated or generate 79.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Marfrig Global Foods  vs.  Microchip Technology Incorpora

Marfrig Global Foods

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marfrig Global may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Microchip Technology

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Microchip Technology Incorporated are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Microchip Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marfrig Global and Microchip Technology

The main advantage of trading using opposite Marfrig Global and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, Microchip Technology 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 Microchip Technology will offset losses from the drop in Microchip Technology's long position.

The idea behind Marfrig Global Foods and Microchip Technology Incorporated 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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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.