Correlation Between Bt Brands and Nova Minerals

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

By analyzing existing cross correlation between Bt Brands and Nova Minerals Limited, you can compare the effects of market volatilities on Bt Brands and Nova Minerals 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 Nova Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bt Brands and Nova Minerals.

Diversification Opportunities for Bt Brands and Nova Minerals

-0.05

Correlation Coefficient

Bt Brands  Nova Minerals

Good diversification

The 3 months correlation between BTBD and Nova is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and Nova Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Minerals Limited 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 Nova Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Minerals Limited has no effect on the direction of Bt Brands i.e., Bt Brands and Nova Minerals go up and down completely randomly.

Pair Corralation between Bt Brands and Nova Minerals

Given the investment horizon of 90 days Bt Brands is expected to generate 0.75 times more return on investment than Nova Minerals. However, Bt Brands is 1.33 times less risky than Nova Minerals. It trades about 0.15 of its potential returns per unit of risk. Nova Minerals Limited is currently generating about -0.07 per unit of risk. If you would invest  138.00  in Bt Brands on October 24, 2024 and sell it today you would earn a total of  20.00  from holding Bt Brands or generate 14.49% 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.  Nova Minerals Limited

Bt Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bt Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Nova Minerals Limited

Risk-Adjusted Performance

3 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Minerals Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Nova Minerals sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bt Brands and Nova Minerals

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

The idea behind Bt Brands and Nova Minerals Limited 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.