Correlation Between Energy and Burnham Holdings

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

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

Diversification Opportunities for Energy and Burnham Holdings

-0.28

Correlation Coefficient

Energy  Burnham Holdings

Very good diversification

The 3 months correlation between Energy and Burnham is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Energy and Environmental and Burnham Holdings PFD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burnham Holdings PFD and Energy 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 Energy and Environmental are associated (or correlated) with Burnham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burnham Holdings PFD has no effect on the direction of Energy i.e., Energy and Burnham Holdings go up and down completely randomly.

Pair Corralation between Energy and Burnham Holdings

Given the investment horizon of 90 days Energy and Environmental is expected to under-perform the Burnham Holdings. In addition to that, Energy is 8.91 times more volatile than Burnham Holdings PFD. It trades about -0.09 of its total potential returns per unit of risk. Burnham Holdings PFD is currently generating about 0.22 per unit of volatility. If you would invest  5,175  in Burnham Holdings PFD on October 10, 2024 and sell it today you would earn a total of  150.00  from holding Burnham Holdings PFD or generate 2.9% return on investment over 90 days.

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

Energy and Environmental  vs.  Burnham Holdings PFD

Energy and Environmental

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energy and Environmental are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Burnham Holdings PFD

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Burnham Holdings PFD are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Burnham Holdings 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 Energy and Burnham Holdings

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

The idea behind Energy and Environmental and Burnham Holdings PFD 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..