Correlation Between Benchmark Botanics and TransGlobal Assets

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

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

Diversification Opportunities for Benchmark Botanics and TransGlobal Assets

0.0

Correlation Coefficient

Benchmark Botanics  TransGlobal Assets

Pay attention - limited upside

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

Pair Corralation between Benchmark Botanics and TransGlobal Assets

If you would invest  0.02  in TransGlobal Assets on September 4, 2024 and sell it today you would earn a total of  0.00  from holding TransGlobal Assets or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Benchmark Botanics  vs.  TransGlobal Assets

Benchmark Botanics

Risk-Adjusted Performance

0 of 100

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.

TransGlobal Assets

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TransGlobal Assets are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, TransGlobal Assets demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Benchmark Botanics and TransGlobal Assets

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

The idea behind Benchmark Botanics and TransGlobal Assets 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.