Correlation Between Broadwind and Odyssean Investment

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

By analyzing existing cross correlation between Broadwind and Odyssean Investment Trust, you can compare the effects of market volatilities on Broadwind and Odyssean 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 Broadwind with a short position of Odyssean Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadwind and Odyssean Investment.

Diversification Opportunities for Broadwind and Odyssean Investment

0.55

Correlation Coefficient

Broadwind  Odyssean Investment

Very weak diversification

The 3 months correlation between Broadwind and Odyssean is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Broadwind and Odyssean Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssean Investment Trust and Broadwind 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 Broadwind are associated (or correlated) with Odyssean Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssean Investment Trust has no effect on the direction of Broadwind i.e., Broadwind and Odyssean Investment go up and down completely randomly.

Pair Corralation between Broadwind and Odyssean Investment

Assuming the 90 days trading horizon Broadwind is expected to under-perform the Odyssean Investment. In addition to that, Broadwind is 4.08 times more volatile than Odyssean Investment Trust. It trades about -0.02 of its total potential returns per unit of risk. Odyssean Investment Trust is currently generating about -0.02 per unit of volatility. If you would invest  204.00  in Odyssean Investment Trust on October 3, 2024 and sell it today you would lose (24.00) from holding Odyssean Investment Trust or give up 11.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Broadwind  vs.  Odyssean Investment Trust

Broadwind

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadwind has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Broadwind is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Odyssean Investment Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Odyssean Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Broadwind and Odyssean Investment

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

The idea behind Broadwind and Odyssean Investment Trust 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.