Correlation Between Bbh Intermediate and Power Momentum

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

By analyzing existing cross correlation between Bbh Intermediate Municipal and Power Momentum Index, you can compare the effects of market volatilities on Bbh Intermediate and Power Momentum 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 Intermediate with a short position of Power Momentum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bbh Intermediate and Power Momentum.

Diversification Opportunities for Bbh Intermediate and Power Momentum

-0.04

Correlation Coefficient

Bbh Intermediate  Power Momentum

Good diversification

The 3 months correlation between Bbh and Power is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bbh Intermediate Municipal and Power Momentum Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Momentum Index and Bbh Intermediate 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 Intermediate Municipal are associated (or correlated) with Power Momentum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Momentum Index has no effect on the direction of Bbh Intermediate i.e., Bbh Intermediate and Power Momentum go up and down completely randomly.

Pair Corralation between Bbh Intermediate and Power Momentum

Assuming the 90 days horizon Bbh Intermediate Municipal is expected to generate 0.12 times more return on investment than Power Momentum. However, Bbh Intermediate Municipal is 8.52 times less risky than Power Momentum. It trades about 0.12 of its potential returns per unit of risk. Power Momentum Index is currently generating about -0.08 per unit of risk. If you would invest  1,012  in Bbh Intermediate Municipal on December 19, 2024 and sell it today you would earn a total of  12.00  from holding Bbh Intermediate Municipal or generate 1.19% return on investment over 90 days.

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

Bbh Intermediate Municipal  vs.  Power Momentum Index

Bbh Intermediate Mun

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bbh Intermediate Municipal are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Bbh Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Power Momentum Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Momentum Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Bbh Intermediate and Power Momentum

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

The idea behind Bbh Intermediate Municipal and Power Momentum Index 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.