Correlation Between BK Variable and Indexa Ms

Can any of the company-specific risk be diversified away by investing in both BK Variable and Indexa Ms 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 BK Variable and Indexa Ms into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BK Variable Internacional and Indexa Ms Rentabilidad, you can compare the effects of market volatilities on BK Variable and Indexa Ms 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 BK Variable with a short position of Indexa Ms. Check out your portfolio center. Please also check ongoing floating volatility patterns of BK Variable and Indexa Ms.

Diversification Opportunities for BK Variable and Indexa Ms

0.82

Correlation Coefficient

BK Variable  Indexa Ms

Very poor diversification

The 3 months correlation between 0P0000120T and Indexa is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding BK Variable Internacional and Indexa Ms Rentabilidad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indexa Ms Rentabilidad and BK Variable 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 BK Variable Internacional are associated (or correlated) with Indexa Ms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indexa Ms Rentabilidad has no effect on the direction of BK Variable i.e., BK Variable and Indexa Ms go up and down completely randomly.

Pair Corralation between BK Variable and Indexa Ms

Assuming the 90 days trading horizon BK Variable Internacional is expected to generate 1.12 times more return on investment than Indexa Ms. However, BK Variable is 1.12 times more volatile than Indexa Ms Rentabilidad. It trades about 0.13 of its potential returns per unit of risk. Indexa Ms Rentabilidad is currently generating about 0.12 per unit of risk. If you would invest  1,712  in BK Variable Internacional on October 27, 2024 and sell it today you would earn a total of  114.00  from holding BK Variable Internacional or generate 6.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.88%
Values	Daily Returns

BK Variable Internacional  vs.  Indexa Ms Rentabilidad

BK Variable Internacional

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BK Variable Internacional are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, BK Variable may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Indexa Ms Rentabilidad

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indexa Ms Rentabilidad are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Indexa Ms is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BK Variable and Indexa Ms

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

The idea behind BK Variable Internacional and Indexa Ms Rentabilidad 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.