Correlation Between Brack Capit and Discount Investment

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

By analyzing existing cross correlation between Brack Capit N and Discount Investment Corp, you can compare the effects of market volatilities on Brack Capit and Discount Investment 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 Brack Capit with a short position of Discount Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brack Capit and Discount Investment.

Diversification Opportunities for Brack Capit and Discount Investment

-0.15

Correlation Coefficient

Brack Capit  Discount Investment

Good diversification

The 3 months correlation between Brack and Discount is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Brack Capit N and Discount Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discount Investment Corp and Brack Capit 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 Brack Capit N are associated (or correlated) with Discount Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discount Investment Corp has no effect on the direction of Brack Capit i.e., Brack Capit and Discount Investment go up and down completely randomly.

Pair Corralation between Brack Capit and Discount Investment

Assuming the 90 days trading horizon Brack Capit N is expected to generate 1.37 times more return on investment than Discount Investment. However, Brack Capit is 1.37 times more volatile than Discount Investment Corp. It trades about 0.0 of its potential returns per unit of risk. Discount Investment Corp is currently generating about -0.01 per unit of risk. If you would invest  3,647,000  in Brack Capit N on October 10, 2024 and sell it today you would lose (932,000) from holding Brack Capit N or give up 25.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.74%
Values	Daily Returns

Brack Capit N  vs.  Discount Investment Corp

Brack Capit N

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brack Capit N has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Discount Investment Corp

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Brack Capit and Discount Investment

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

The idea behind Brack Capit N and Discount Investment Corp 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 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.