Correlation Between Burnham Holdings and Merchants National

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

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

Diversification Opportunities for Burnham Holdings and Merchants National

-0.15

Correlation Coefficient

Burnham Holdings  Merchants National

Good diversification

The 3 months correlation between Burnham and Merchants is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Burnham Holdings and Merchants National Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants National and Burnham 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 Burnham Holdings are associated (or correlated) with Merchants National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants National has no effect on the direction of Burnham Holdings i.e., Burnham Holdings and Merchants National go up and down completely randomly.

Pair Corralation between Burnham Holdings and Merchants National

Assuming the 90 days horizon Burnham Holdings is expected to under-perform the Merchants National. But the pink sheet apears to be less risky and, when comparing its historical volatility, Burnham Holdings is 2.76 times less risky than Merchants National. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Merchants National Properties is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  175,000  in Merchants National Properties on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Merchants National Properties or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Burnham Holdings  vs.  Merchants National Properties

Burnham Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Burnham Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Burnham Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Merchants National

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Merchants National Properties are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Merchants National is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Burnham Holdings and Merchants National

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

The idea behind Burnham Holdings and Merchants National Properties 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.