Correlation Between Bt Brands and LOWES

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

By analyzing existing cross correlation between Bt Brands and LOWES INC 65, you can compare the effects of market volatilities on Bt Brands and LOWES 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 LOWES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bt Brands and LOWES.

Diversification Opportunities for Bt Brands and LOWES

-0.23

Correlation Coefficient

Bt Brands  LOWES

Very good diversification

The 3 months correlation between BTBD and LOWES is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and LOWES INC 65 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOWES INC 65 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 LOWES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOWES INC 65 has no effect on the direction of Bt Brands i.e., Bt Brands and LOWES go up and down completely randomly.

Pair Corralation between Bt Brands and LOWES

Given the investment horizon of 90 days Bt Brands is expected to generate 15.04 times more return on investment than LOWES. However, Bt Brands is 15.04 times more volatile than LOWES INC 65. It trades about 0.06 of its potential returns per unit of risk. LOWES INC 65 is currently generating about 0.06 per unit of risk. If you would invest  138.00  in Bt Brands on December 21, 2024 and sell it today you would earn a total of  14.00  from holding Bt Brands or generate 10.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

Bt Brands  vs.  LOWES INC 65

Bt Brands

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bt Brands are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, Bt Brands exhibited solid returns over the last few months and may actually be approaching a breakup point.

LOWES INC 65

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LOWES INC 65 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, LOWES is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bt Brands and LOWES

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

The idea behind Bt Brands and LOWES INC 65 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.