Correlation Between Popular Capital and BFC Capital

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

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

Diversification Opportunities for Popular Capital and BFC Capital

0.43

Correlation Coefficient

Popular Capital  BFC Capital

Very weak diversification

The 3 months correlation between Popular and BFC is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Popular Capital Trust and BFC Capital Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BFC Capital Trust and Popular Capital 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 Popular Capital Trust are associated (or correlated) with BFC Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BFC Capital Trust has no effect on the direction of Popular Capital i.e., Popular Capital and BFC Capital go up and down completely randomly.

Pair Corralation between Popular Capital and BFC Capital

Assuming the 90 days horizon Popular Capital Trust is expected to generate 1.02 times more return on investment than BFC Capital. However, Popular Capital is 1.02 times more volatile than BFC Capital Trust. It trades about 0.09 of its potential returns per unit of risk. BFC Capital Trust is currently generating about 0.03 per unit of risk. If you would invest  2,500  in Popular Capital Trust on August 31, 2024 and sell it today you would earn a total of  97.00  from holding Popular Capital Trust or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Popular Capital Trust  vs.  BFC Capital Trust

Popular Capital Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Popular Capital Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Popular Capital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

BFC Capital Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BFC Capital Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, BFC Capital is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Popular Capital and BFC Capital

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

The idea behind Popular Capital Trust and BFC Capital Trust 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.