Correlation Between Matson Money and Bridge Builder

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

By analyzing existing cross correlation between Matson Money Equity and Bridge Builder International, you can compare the effects of market volatilities on Matson Money and Bridge Builder 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 Matson Money with a short position of Bridge Builder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matson Money and Bridge Builder.

Diversification Opportunities for Matson Money and Bridge Builder

-0.22

Correlation Coefficient

Matson Money  Bridge Builder

Very good diversification

The 3 months correlation between Matson and Bridge is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Matson Money Equity and Bridge Builder International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Builder Inter and Matson Money 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 Matson Money Equity are associated (or correlated) with Bridge Builder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Builder Inter has no effect on the direction of Matson Money i.e., Matson Money and Bridge Builder go up and down completely randomly.

Pair Corralation between Matson Money and Bridge Builder

Assuming the 90 days horizon Matson Money Equity is expected to under-perform the Bridge Builder. In addition to that, Matson Money is 1.08 times more volatile than Bridge Builder International. It trades about -0.08 of its total potential returns per unit of risk. Bridge Builder International is currently generating about 0.18 per unit of volatility. If you would invest  1,232  in Bridge Builder International on December 29, 2024 and sell it today you would earn a total of  121.00  from holding Bridge Builder International or generate 9.82% return on investment over 90 days.

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

Matson Money Equity  vs.  Bridge Builder International

Matson Money Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matson Money Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Matson Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bridge Builder Inter

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bridge Builder International are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Bridge Builder may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Matson Money and Bridge Builder

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

The idea behind Matson Money Equity and Bridge Builder International 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.