Correlation Between BKSY WT and Momentus

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

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

Diversification Opportunities for BKSY WT and Momentus

0.62

Correlation Coefficient

BKSY WT  Momentus

Poor diversification

The 3 months correlation between BKSY and Momentus is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding BKSY WT and Momentus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Momentus and BKSY WT 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 BKSY WT are associated (or correlated) with Momentus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Momentus has no effect on the direction of BKSY WT i.e., BKSY WT and Momentus go up and down completely randomly.

Pair Corralation between BKSY WT and Momentus

Assuming the 90 days trading horizon BKSY WT is expected to generate 3.92 times less return on investment than Momentus. But when comparing it to its historical volatility, BKSY WT is 2.75 times less risky than Momentus. It trades about 0.21 of its potential returns per unit of risk. Momentus is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1.40  in Momentus on October 11, 2024 and sell it today you would earn a total of  5.27  from holding Momentus or generate 376.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

BKSY WT  vs.  Momentus

BKSY WT

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BKSY WT are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BKSY WT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Momentus

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Momentus are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Momentus showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BKSY WT and Momentus

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

The idea behind BKSY WT and Momentus 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.