Correlation Between BFC Capital and Popular

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

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

Diversification Opportunities for BFC Capital and Popular

-0.27

Correlation Coefficient

BFC Capital  Popular

Very good diversification

The 3 months correlation between BFC and Popular is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding BFC Capital Trust and Popular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Popular and BFC Capital 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 BFC Capital Trust are associated (or correlated) with Popular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Popular has no effect on the direction of BFC Capital i.e., BFC Capital and Popular go up and down completely randomly.

Pair Corralation between BFC Capital and Popular

Assuming the 90 days horizon BFC Capital is expected to generate 1.45 times less return on investment than Popular. But when comparing it to its historical volatility, BFC Capital Trust is 1.5 times less risky than Popular. It trades about 0.03 of its potential returns per unit of risk. Popular is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,389  in Popular on September 3, 2024 and sell it today you would earn a total of  37.00  from holding Popular or generate 1.55% return on investment over 90 days.

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

BFC Capital Trust  vs.  Popular

BFC Capital Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BFC Capital Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, BFC Capital is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Popular

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Popular are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Popular is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BFC Capital and Popular

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

The idea behind BFC Capital Trust and Popular 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.