Correlation Between Fundamental Invest and Bavarian Nordic

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

By analyzing existing cross correlation between Fundamental Invest Stock and Bavarian Nordic, you can compare the effects of market volatilities on Fundamental Invest and Bavarian Nordic 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 Fundamental Invest with a short position of Bavarian Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Invest and Bavarian Nordic.

Diversification Opportunities for Fundamental Invest and Bavarian Nordic

0.83

Correlation Coefficient

Fundamental Invest  Bavarian Nordic

Very poor diversification

The 3 months correlation between Fundamental and Bavarian is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Invest Stock and Bavarian Nordic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bavarian Nordic and Fundamental Invest 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 Fundamental Invest Stock are associated (or correlated) with Bavarian Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bavarian Nordic has no effect on the direction of Fundamental Invest i.e., Fundamental Invest and Bavarian Nordic go up and down completely randomly.

Pair Corralation between Fundamental Invest and Bavarian Nordic

Assuming the 90 days trading horizon Fundamental Invest Stock is expected to generate 0.28 times more return on investment than Bavarian Nordic. However, Fundamental Invest Stock is 3.53 times less risky than Bavarian Nordic. It trades about -0.09 of its potential returns per unit of risk. Bavarian Nordic is currently generating about -0.06 per unit of risk. If you would invest  20,191  in Fundamental Invest Stock on October 23, 2024 and sell it today you would lose (1,098) from holding Fundamental Invest Stock or give up 5.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Fundamental Invest Stock  vs.  Bavarian Nordic

Fundamental Invest Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundamental Invest Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Fundamental Invest is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Bavarian Nordic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bavarian Nordic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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 Fundamental Invest and Bavarian Nordic

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

The idea behind Fundamental Invest Stock and Bavarian Nordic 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.