Correlation Between Bankers Investment and Tetragon Financial

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

By analyzing existing cross correlation between Bankers Investment Trust and Tetragon Financial Group, you can compare the effects of market volatilities on Bankers Investment and Tetragon Financial 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 Bankers Investment with a short position of Tetragon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankers Investment and Tetragon Financial.

Diversification Opportunities for Bankers Investment and Tetragon Financial

0.48

Correlation Coefficient

Bankers Investment  Tetragon Financial

Very weak diversification

The 3 months correlation between Bankers and Tetragon is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bankers Investment Trust and Tetragon Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetragon Financial and Bankers Investment 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 Bankers Investment Trust are associated (or correlated) with Tetragon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetragon Financial has no effect on the direction of Bankers Investment i.e., Bankers Investment and Tetragon Financial go up and down completely randomly.

Pair Corralation between Bankers Investment and Tetragon Financial

Assuming the 90 days trading horizon Bankers Investment is expected to generate 2.82 times less return on investment than Tetragon Financial. In addition to that, Bankers Investment is 1.31 times more volatile than Tetragon Financial Group. It trades about 0.03 of its total potential returns per unit of risk. Tetragon Financial Group is currently generating about 0.11 per unit of volatility. If you would invest  1,415  in Tetragon Financial Group on October 11, 2024 and sell it today you would earn a total of  15.00  from holding Tetragon Financial Group or generate 1.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bankers Investment Trust  vs.  Tetragon Financial Group

Bankers Investment Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bankers Investment Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bankers Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Tetragon Financial

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tetragon Financial Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Tetragon Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bankers Investment and Tetragon Financial

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

The idea behind Bankers Investment Trust and Tetragon Financial Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.