Correlation Between BMTC and Alignvest Acquisition

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

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

Diversification Opportunities for BMTC and Alignvest Acquisition

0.27

Correlation Coefficient

BMTC  Alignvest Acquisition

Modest diversification

The 3 months correlation between BMTC and Alignvest is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding BMTC Group and Alignvest Acquisition II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alignvest Acquisition and BMTC 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 BMTC Group are associated (or correlated) with Alignvest Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alignvest Acquisition has no effect on the direction of BMTC i.e., BMTC and Alignvest Acquisition go up and down completely randomly.

Pair Corralation between BMTC and Alignvest Acquisition

Assuming the 90 days trading horizon BMTC is expected to generate 3.09 times less return on investment than Alignvest Acquisition. But when comparing it to its historical volatility, BMTC Group is 1.12 times less risky than Alignvest Acquisition. It trades about 0.02 of its potential returns per unit of risk. Alignvest Acquisition II is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  465.00  in Alignvest Acquisition II on October 24, 2024 and sell it today you would earn a total of  205.00  from holding Alignvest Acquisition II or generate 44.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

BMTC Group  vs.  Alignvest Acquisition II

BMTC Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BMTC Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BMTC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Alignvest Acquisition

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alignvest Acquisition II are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Alignvest Acquisition may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BMTC and Alignvest Acquisition

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

The idea behind BMTC Group and Alignvest Acquisition II 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 Commodity Directory module to find actively traded commodities issued by global exchanges.