Correlation Between Good Natured and Burnham Holdings

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

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

Diversification Opportunities for Good Natured and Burnham Holdings

-0.38

Correlation Coefficient

Good Natured  Burnham Holdings

Very good diversification

The 3 months correlation between Good and Burnham is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding good natured Products and Burnham Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burnham Holdings and Good Natured 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 good natured Products 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 has no effect on the direction of Good Natured i.e., Good Natured and Burnham Holdings go up and down completely randomly.

Pair Corralation between Good Natured and Burnham Holdings

Assuming the 90 days horizon good natured Products is expected to under-perform the Burnham Holdings. In addition to that, Good Natured is 2.41 times more volatile than Burnham Holdings. It trades about -0.01 of its total potential returns per unit of risk. Burnham Holdings is currently generating about 0.04 per unit of volatility. If you would invest  1,078  in Burnham Holdings on September 26, 2024 and sell it today you would earn a total of  317.00  from holding Burnham Holdings or generate 29.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.48%
Values	Daily Returns

good natured Products  vs.  Burnham Holdings

good natured Products

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days good natured Products has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly conflicting basic indicators, Good Natured reported solid returns over the last few months and may actually be approaching a breakup point.

Burnham Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Burnham Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Burnham Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Good Natured and Burnham Holdings

The main advantage of trading using opposite Good Natured and Burnham Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Good Natured 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 good natured Products and Burnham Holdings 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.