Correlation Between Butn and COG Financial

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

By analyzing existing cross correlation between Butn and COG Financial Services, you can compare the effects of market volatilities on Butn and COG Financial 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 Butn with a short position of COG Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Butn and COG Financial.

Diversification Opportunities for Butn and COG Financial

-0.7

Correlation Coefficient

Butn  COG Financial

Excellent diversification

The 3 months correlation between Butn and COG is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Butn and COG Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COG Financial Services and Butn 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 Butn are associated (or correlated) with COG Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COG Financial Services has no effect on the direction of Butn i.e., Butn and COG Financial go up and down completely randomly.

Pair Corralation between Butn and COG Financial

Assuming the 90 days trading horizon Butn is expected to under-perform the COG Financial. In addition to that, Butn is 2.05 times more volatile than COG Financial Services. It trades about -0.01 of its total potential returns per unit of risk. COG Financial Services is currently generating about -0.01 per unit of volatility. If you would invest  129.00  in COG Financial Services on October 3, 2024 and sell it today you would lose (31.00) from holding COG Financial Services or give up 24.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Butn  vs.  COG Financial Services

Butn

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Butn are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Butn unveiled solid returns over the last few months and may actually be approaching a breakup point.

COG Financial Services

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COG Financial Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, COG Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Butn and COG Financial

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

The idea behind Butn and COG Financial Services 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.