Correlation Between Bt Brands and Kinsale Capital

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

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

Diversification Opportunities for Bt Brands and Kinsale Capital

-0.33

Correlation Coefficient

Bt Brands  Kinsale Capital

Very good diversification

The 3 months correlation between BTBD and Kinsale is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and Kinsale Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinsale Capital Group and Bt Brands 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 Bt Brands are associated (or correlated) with Kinsale Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinsale Capital Group has no effect on the direction of Bt Brands i.e., Bt Brands and Kinsale Capital go up and down completely randomly.

Pair Corralation between Bt Brands and Kinsale Capital

Given the investment horizon of 90 days Bt Brands is expected to generate 1.11 times less return on investment than Kinsale Capital. In addition to that, Bt Brands is 2.32 times more volatile than Kinsale Capital Group. It trades about 0.02 of its total potential returns per unit of risk. Kinsale Capital Group is currently generating about 0.06 per unit of volatility. If you would invest  26,361  in Kinsale Capital Group on September 19, 2024 and sell it today you would earn a total of  22,094  from holding Kinsale Capital Group or generate 83.81% return on investment over 90 days.

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

Bt Brands  vs.  Kinsale Capital Group

Bt Brands

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bt Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Bt Brands is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Kinsale Capital Group

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinsale Capital Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Kinsale Capital is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bt Brands and Kinsale Capital

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

The idea behind Bt Brands and Kinsale Capital 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.