Correlation Between BBAI WT and Origin Materials

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

By analyzing existing cross correlation between BBAI WT and Origin Materials Warrant, you can compare the effects of market volatilities on BBAI WT and Origin Materials 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 BBAI WT with a short position of Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBAI WT and Origin Materials.

Diversification Opportunities for BBAI WT and Origin Materials

-0.11

Correlation Coefficient

BBAI WT  Origin Materials

Good diversification

The 3 months correlation between BBAI and Origin is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BBAI WT and Origin Materials Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials Warrant and BBAI WT 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 BBAI WT are associated (or correlated) with Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials Warrant has no effect on the direction of BBAI WT i.e., BBAI WT and Origin Materials go up and down completely randomly.

Pair Corralation between BBAI WT and Origin Materials

Assuming the 90 days trading horizon BBAI WT is expected to generate 1.2 times more return on investment than Origin Materials. However, BBAI WT is 1.2 times more volatile than Origin Materials Warrant. It trades about 0.49 of its potential returns per unit of risk. Origin Materials Warrant is currently generating about -0.04 per unit of risk. If you would invest  31.00  in BBAI WT on September 30, 2024 and sell it today you would earn a total of  114.00  from holding BBAI WT or generate 367.74% return on investment over 90 days.

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

BBAI WT  vs.  Origin Materials Warrant

BBAI WT

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BBAI WT are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, BBAI WT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Origin Materials Warrant

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Materials Warrant are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Origin Materials showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BBAI WT and Origin Materials

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

The idea behind BBAI WT and Origin Materials Warrant 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.