Correlation Between BB Seguridade and Athene Holding

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

By analyzing existing cross correlation between BB Seguridade Participacoes and Athene Holding, you can compare the effects of market volatilities on BB Seguridade and Athene Holding 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 BB Seguridade with a short position of Athene Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and Athene Holding.

Diversification Opportunities for BB Seguridade and Athene Holding

0.87

Correlation Coefficient

BB Seguridade  Athene Holding

Very poor diversification

The 3 months correlation between BBSEY and Athene is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and Athene Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athene Holding and BB Seguridade 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 BB Seguridade Participacoes are associated (or correlated) with Athene Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athene Holding has no effect on the direction of BB Seguridade i.e., BB Seguridade and Athene Holding go up and down completely randomly.

Pair Corralation between BB Seguridade and Athene Holding

Assuming the 90 days horizon BB Seguridade Participacoes is expected to generate 10.22 times more return on investment than Athene Holding. However, BB Seguridade is 10.22 times more volatile than Athene Holding. It trades about 0.26 of its potential returns per unit of risk. Athene Holding is currently generating about 0.08 per unit of risk. If you would invest  544.00  in BB Seguridade Participacoes on December 29, 2024 and sell it today you would earn a total of  161.00  from holding BB Seguridade Participacoes or generate 29.6% return on investment over 90 days.

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

BB Seguridade Participacoes  vs.  Athene Holding

BB Seguridade Partic

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BB Seguridade Participacoes are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, BB Seguridade showed solid returns over the last few months and may actually be approaching a breakup point.

Athene Holding

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Athene Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Athene Holding is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BB Seguridade and Athene Holding

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

The idea behind BB Seguridade Participacoes and Athene Holding 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.