Correlation Between Caldwell Partners and BMTC

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

By analyzing existing cross correlation between Caldwell Partners International and BMTC Group, you can compare the effects of market volatilities on Caldwell Partners and BMTC 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 Caldwell Partners with a short position of BMTC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caldwell Partners and BMTC.

Diversification Opportunities for Caldwell Partners and BMTC

0.74

Correlation Coefficient

Caldwell Partners  BMTC

Poor diversification

The 3 months correlation between Caldwell and BMTC is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Caldwell Partners Internationa and BMTC Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMTC Group and Caldwell Partners 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 Caldwell Partners International are associated (or correlated) with BMTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMTC Group has no effect on the direction of Caldwell Partners i.e., Caldwell Partners and BMTC go up and down completely randomly.

Pair Corralation between Caldwell Partners and BMTC

Assuming the 90 days trading horizon Caldwell Partners International is expected to under-perform the BMTC. In addition to that, Caldwell Partners is 2.09 times more volatile than BMTC Group. It trades about -0.08 of its total potential returns per unit of risk. BMTC Group is currently generating about -0.05 per unit of volatility. If you would invest  1,320  in BMTC Group on December 21, 2024 and sell it today you would lose (107.00) from holding BMTC Group or give up 8.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Caldwell Partners Internationa  vs.  BMTC Group

Caldwell Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caldwell Partners International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

BMTC Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days BMTC Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Caldwell Partners and BMTC

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

The idea behind Caldwell Partners International and BMTC Group 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.