Correlation Between Benchmark Botanics and Sunniva

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

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

Diversification Opportunities for Benchmark Botanics and Sunniva

0.0

Correlation Coefficient

Benchmark Botanics  Sunniva

Pay attention - limited upside

The 3 months correlation between Benchmark and Sunniva is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Botanics and Sunniva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunniva and Benchmark Botanics 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 Benchmark Botanics are associated (or correlated) with Sunniva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunniva has no effect on the direction of Benchmark Botanics i.e., Benchmark Botanics and Sunniva go up and down completely randomly.

Pair Corralation between Benchmark Botanics and Sunniva

Assuming the 90 days horizon Benchmark Botanics is expected to generate 1.9 times less return on investment than Sunniva. But when comparing it to its historical volatility, Benchmark Botanics is 1.71 times less risky than Sunniva. It trades about 0.04 of its potential returns per unit of risk. Sunniva is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Sunniva on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Sunniva or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Benchmark Botanics  vs.  Sunniva

Benchmark Botanics

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Benchmark Botanics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Benchmark Botanics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sunniva

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunniva has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sunniva is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Benchmark Botanics and Sunniva

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

The idea behind Benchmark Botanics and Sunniva 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.