Correlation Between Bbh Limited and Bbh Select

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

By analyzing existing cross correlation between Bbh Limited Duration and Bbh Select Series, you can compare the effects of market volatilities on Bbh Limited and Bbh Select 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 Bbh Limited with a short position of Bbh Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bbh Limited and Bbh Select.

Diversification Opportunities for Bbh Limited and Bbh Select

0.84

Correlation Coefficient

Bbh Limited  Bbh Select

Very poor diversification

The 3 months correlation between Bbh and Bbh is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bbh Limited Duration and Bbh Select Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bbh Select Series and Bbh Limited 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 Bbh Limited Duration are associated (or correlated) with Bbh Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bbh Select Series has no effect on the direction of Bbh Limited i.e., Bbh Limited and Bbh Select go up and down completely randomly.

Pair Corralation between Bbh Limited and Bbh Select

Assuming the 90 days horizon Bbh Limited is expected to generate 13.65 times less return on investment than Bbh Select. But when comparing it to its historical volatility, Bbh Limited Duration is 10.15 times less risky than Bbh Select. It trades about 0.17 of its potential returns per unit of risk. Bbh Select Series is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,150  in Bbh Select Series on September 5, 2024 and sell it today you would earn a total of  142.00  from holding Bbh Select Series or generate 12.35% return on investment over 90 days.

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

Bbh Limited Duration  vs.  Bbh Select Series

Bbh Limited Duration

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bbh Limited Duration are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Bbh Limited is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bbh Select Series

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bbh Select Series are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Bbh Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bbh Limited and Bbh Select

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

The idea behind Bbh Limited Duration and Bbh Select Series 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.