Correlation Between Bt Brands and Plexus Corp

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

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

Diversification Opportunities for Bt Brands and Plexus Corp

-0.33

Correlation Coefficient

Bt Brands  Plexus Corp

Very good diversification

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

Pair Corralation between Bt Brands and Plexus Corp

Given the investment horizon of 90 days Bt Brands is expected to generate 3.04 times more return on investment than Plexus Corp. However, Bt Brands is 3.04 times more volatile than Plexus Corp. It trades about 0.03 of its potential returns per unit of risk. Plexus Corp is currently generating about 0.06 per unit of risk. If you would invest  165.00  in Bt Brands on September 14, 2024 and sell it today you would lose (5.00) from holding Bt Brands or give up 3.03% of portfolio value over 90 days.

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

Bt Brands  vs.  Plexus Corp

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.

Plexus Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Plexus Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Plexus Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bt Brands and Plexus Corp

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

The idea behind Bt Brands and Plexus Corp 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.