Correlation Between Butterfly Network and Brother Industries
Can any of the company-specific risk be diversified away by investing in both Butterfly Network and Brother Industries 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 Butterfly Network and Brother Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Butterfly Network and Brother Industries, you can compare the effects of market volatilities on Butterfly Network and Brother Industries 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 Butterfly Network with a short position of Brother Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Butterfly Network and Brother Industries.
Diversification Opportunities for Butterfly Network and Brother Industries
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Butterfly and Brother is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Butterfly Network and Brother Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brother Industries and Butterfly Network 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 Butterfly Network are associated (or correlated) with Brother Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brother Industries has no effect on the direction of Butterfly Network i.e., Butterfly Network and Brother Industries go up and down completely randomly.
Pair Corralation between Butterfly Network and Brother Industries
Given the investment horizon of 90 days Butterfly Network is expected to generate 0.21 times more return on investment than Brother Industries. However, Butterfly Network is 4.8 times less risky than Brother Industries. It trades about -0.04 of its potential returns per unit of risk. Brother Industries is currently generating about -0.11 per unit of risk. If you would invest 323.00 in Butterfly Network on December 29, 2024 and sell it today you would lose (86.00) from holding Butterfly Network or give up 26.63% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 96.83% |
Values | Daily Returns |
Butterfly Network vs. Brother Industries
Performance |
Timeline |
Butterfly Network |
Brother Industries |
Butterfly Network and Brother Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Butterfly Network and Brother Industries
The main advantage of trading using opposite Butterfly Network and Brother Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Butterfly Network position performs unexpectedly, Brother Industries 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 Brother Industries will offset losses from the drop in Brother Industries' long position.Butterfly Network vs. Masimo | Butterfly Network vs. Glaukos Corp | Butterfly Network vs. Inspire Medical Systems | Butterfly Network vs. Medtronic PLC |
Brother Industries vs. Avery Dennison Corp | Brother Industries vs. Merit Medical Systems | Brother Industries vs. Weibo Corp | Brother Industries vs. Tower One Wireless |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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