Correlation Between Big Bird and Packages
Can any of the company-specific risk be diversified away by investing in both Big Bird and Packages 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 Big Bird and Packages into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Bird Foods and Packages, you can compare the effects of market volatilities on Big Bird and Packages 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 Big Bird with a short position of Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Bird and Packages.
Diversification Opportunities for Big Bird and Packages
Very weak diversification
The 3 months correlation between Big and Packages is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Big Bird Foods and Packages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packages and Big Bird 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 Big Bird Foods are associated (or correlated) with Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packages has no effect on the direction of Big Bird i.e., Big Bird and Packages go up and down completely randomly.
Pair Corralation between Big Bird and Packages
Assuming the 90 days trading horizon Big Bird Foods is expected to under-perform the Packages. In addition to that, Big Bird is 1.68 times more volatile than Packages. It trades about -0.06 of its total potential returns per unit of risk. Packages is currently generating about -0.04 per unit of volatility. If you would invest 61,397 in Packages on December 3, 2024 and sell it today you would lose (4,638) from holding Packages or give up 7.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.41% |
Values | Daily Returns |
Big Bird Foods vs. Packages
Performance |
Timeline |
Big Bird Foods |
Packages |
Big Bird and Packages Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Big Bird and Packages
The main advantage of trading using opposite Big Bird and Packages positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Bird position performs unexpectedly, Packages 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 Packages will offset losses from the drop in Packages' long position.Big Bird vs. Aisha Steel Mills | Big Bird vs. Meezan Bank | Big Bird vs. Honda Atlas Cars | Big Bird vs. Agha Steel Industries |
Packages vs. Aisha Steel Mills | Packages vs. International Steels | Packages vs. Bank of Punjab | Packages vs. First Fidelity Leasing |
Check out your portfolio center.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |