Correlation Between BGF Retail and EBEST Investment
Can any of the company-specific risk be diversified away by investing in both BGF Retail and EBEST Investment 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 BGF Retail and EBEST Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BGF Retail Co and EBEST Investment Securities, you can compare the effects of market volatilities on BGF Retail and EBEST Investment 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 BGF Retail with a short position of EBEST Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Retail and EBEST Investment.
Diversification Opportunities for BGF Retail and EBEST Investment
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BGF and EBEST is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BGF Retail Co and EBEST Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBEST Investment Sec and BGF Retail 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 BGF Retail Co are associated (or correlated) with EBEST Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBEST Investment Sec has no effect on the direction of BGF Retail i.e., BGF Retail and EBEST Investment go up and down completely randomly.
Pair Corralation between BGF Retail and EBEST Investment
Assuming the 90 days trading horizon BGF Retail Co is expected to under-perform the EBEST Investment. In addition to that, BGF Retail is 1.04 times more volatile than EBEST Investment Securities. It trades about -0.02 of its total potential returns per unit of risk. EBEST Investment Securities is currently generating about 0.0 per unit of volatility. If you would invest 400,000 in EBEST Investment Securities on December 2, 2024 and sell it today you would lose (2,000) from holding EBEST Investment Securities or give up 0.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
BGF Retail Co vs. EBEST Investment Securities
Performance |
Timeline |
BGF Retail |
EBEST Investment Sec |
BGF Retail and EBEST Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BGF Retail and EBEST Investment
The main advantage of trading using opposite BGF Retail and EBEST Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BGF Retail position performs unexpectedly, EBEST Investment 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 EBEST Investment will offset losses from the drop in EBEST Investment's long position.BGF Retail vs. Finebesteel | BGF Retail vs. Samwon Steel | BGF Retail vs. SK Chemicals Co | BGF Retail vs. Golden Bridge 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 the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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