Correlation Between Bt Brands and CONSOLIDATED

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

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

Diversification Opportunities for Bt Brands and CONSOLIDATED

-0.01

Correlation Coefficient

Bt Brands  CONSOLIDATED

Good diversification

The 3 months correlation between BTBD and CONSOLIDATED is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and CONSOLIDATED EDISON PANY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOLIDATED EDISON PANY 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 CONSOLIDATED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOLIDATED EDISON PANY has no effect on the direction of Bt Brands i.e., Bt Brands and CONSOLIDATED go up and down completely randomly.

Pair Corralation between Bt Brands and CONSOLIDATED

Given the investment horizon of 90 days Bt Brands is expected to under-perform the CONSOLIDATED. In addition to that, Bt Brands is 10.92 times more volatile than CONSOLIDATED EDISON PANY. It trades about -0.05 of its total potential returns per unit of risk. CONSOLIDATED EDISON PANY is currently generating about -0.04 per unit of volatility. If you would invest  8,562  in CONSOLIDATED EDISON PANY on December 5, 2024 and sell it today you would lose (82.00) from holding CONSOLIDATED EDISON PANY or give up 0.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.12%
Values	Daily Returns

Bt Brands  vs.  CONSOLIDATED EDISON PANY

Bt Brands

Risk-Adjusted Performance

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 weak fundamental drivers, Bt Brands may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CONSOLIDATED EDISON PANY

Risk-Adjusted Performance

Very Weak

Over the last 90 days CONSOLIDATED EDISON PANY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONSOLIDATED is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bt Brands and CONSOLIDATED

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

The idea behind Bt Brands and CONSOLIDATED EDISON PANY 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.