Correlation Between Bavarian Nordic and Carnegie Wealth

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

By analyzing existing cross correlation between Bavarian Nordic and Carnegie Wealth Management, you can compare the effects of market volatilities on Bavarian Nordic and Carnegie Wealth 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 Bavarian Nordic with a short position of Carnegie Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bavarian Nordic and Carnegie Wealth.

Diversification Opportunities for Bavarian Nordic and Carnegie Wealth

0.45

Correlation Coefficient

Bavarian Nordic  Carnegie Wealth

Very weak diversification

The 3 months correlation between Bavarian and Carnegie is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic and Carnegie Wealth Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Wealth Mana and Bavarian Nordic 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 Bavarian Nordic are associated (or correlated) with Carnegie Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Wealth Mana has no effect on the direction of Bavarian Nordic i.e., Bavarian Nordic and Carnegie Wealth go up and down completely randomly.

Pair Corralation between Bavarian Nordic and Carnegie Wealth

Assuming the 90 days trading horizon Bavarian Nordic is expected to under-perform the Carnegie Wealth. In addition to that, Bavarian Nordic is 3.15 times more volatile than Carnegie Wealth Management. It trades about -0.03 of its total potential returns per unit of risk. Carnegie Wealth Management is currently generating about -0.01 per unit of volatility. If you would invest  12,780  in Carnegie Wealth Management on October 8, 2024 and sell it today you would lose (120.00) from holding Carnegie Wealth Management or give up 0.94% of portfolio value over 90 days.

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

Bavarian Nordic  vs.  Carnegie Wealth Management

Bavarian Nordic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bavarian Nordic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bavarian Nordic is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Carnegie Wealth Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carnegie Wealth Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Carnegie Wealth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bavarian Nordic and Carnegie Wealth

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

The idea behind Bavarian Nordic and Carnegie Wealth Management 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.