Correlation Between BigBearai Holdings and 42704LAA2

Can any of the company-specific risk be diversified away by investing in both BigBearai Holdings and 42704LAA2 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 BigBearai Holdings and 42704LAA2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BigBearai Holdings and Herc Holdings 55, you can compare the effects of market volatilities on BigBearai Holdings and 42704LAA2 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 BigBearai Holdings with a short position of 42704LAA2. Check out your portfolio center. Please also check ongoing floating volatility patterns of BigBearai Holdings and 42704LAA2.

Diversification Opportunities for BigBearai Holdings and 42704LAA2

0.09

Correlation Coefficient

BigBearai Holdings  42704LAA2

Significant diversification

The 3 months correlation between BigBearai and 42704LAA2 is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding BigBearai Holdings and Herc Holdings 55 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings 55 and BigBearai Holdings 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 BigBearai Holdings are associated (or correlated) with 42704LAA2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings 55 has no effect on the direction of BigBearai Holdings i.e., BigBearai Holdings and 42704LAA2 go up and down completely randomly.

Pair Corralation between BigBearai Holdings and 42704LAA2

Given the investment horizon of 90 days BigBearai Holdings is expected to generate 34.95 times more return on investment than 42704LAA2. However, BigBearai Holdings is 34.95 times more volatile than Herc Holdings 55. It trades about 0.09 of its potential returns per unit of risk. Herc Holdings 55 is currently generating about 0.05 per unit of risk. If you would invest  423.00  in BigBearai Holdings on December 5, 2024 and sell it today you would earn a total of  48.00  from holding BigBearai Holdings or generate 11.35% return on investment over 90 days.

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

BigBearai Holdings  vs.  Herc Holdings 55

BigBearai Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BigBearai Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, BigBearai Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Herc Holdings 55

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Herc Holdings 55 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 42704LAA2 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BigBearai Holdings and 42704LAA2

The main advantage of trading using opposite BigBearai Holdings and 42704LAA2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BigBearai Holdings position performs unexpectedly, 42704LAA2 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 42704LAA2 will offset losses from the drop in 42704LAA2's long position.

The idea behind BigBearai Holdings and Herc Holdings 55 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.