Correlation Between Bridgetown Holdings and Landsea Homes

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

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

Diversification Opportunities for Bridgetown Holdings and Landsea Homes

-0.3

Correlation Coefficient

Bridgetown Holdings  Landsea Homes

Very good diversification

The 3 months correlation between Bridgetown and Landsea is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bridgetown Holdings and Landsea Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Landsea Homes and Bridgetown Holdings 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 Bridgetown Holdings are associated (or correlated) with Landsea Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Landsea Homes has no effect on the direction of Bridgetown Holdings i.e., Bridgetown Holdings and Landsea Homes go up and down completely randomly.

Pair Corralation between Bridgetown Holdings and Landsea Homes

If you would invest  21.00  in Bridgetown Holdings on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Bridgetown Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Bridgetown Holdings  vs.  Landsea Homes

Bridgetown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bridgetown Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Bridgetown Holdings is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Landsea Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Landsea Homes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Bridgetown Holdings and Landsea Homes

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

The idea behind Bridgetown Holdings and Landsea Homes 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.