Correlation Between Investor and BBX Capital

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

By analyzing existing cross correlation between Investor AB ser and BBX Capital, you can compare the effects of market volatilities on Investor and BBX Capital 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 Investor with a short position of BBX Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and BBX Capital.

Diversification Opportunities for Investor and BBX Capital

-0.46

Correlation Coefficient

Investor  BBX Capital

Very good diversification

The 3 months correlation between Investor and BBX is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and BBX Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBX Capital and Investor 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 Investor AB ser are associated (or correlated) with BBX Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBX Capital has no effect on the direction of Investor i.e., Investor and BBX Capital go up and down completely randomly.

Pair Corralation between Investor and BBX Capital

Assuming the 90 days horizon Investor AB ser is expected to generate 1.04 times more return on investment than BBX Capital. However, Investor is 1.04 times more volatile than BBX Capital. It trades about 0.14 of its potential returns per unit of risk. BBX Capital is currently generating about -0.11 per unit of risk. If you would invest  2,633  in Investor AB ser on December 29, 2024 and sell it today you would earn a total of  412.00  from holding Investor AB ser or generate 15.65% return on investment over 90 days.

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

Investor AB ser  vs.  BBX Capital

Investor AB ser

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investor AB ser are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Investor reported solid returns over the last few months and may actually be approaching a breakup point.

BBX Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days BBX Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Investor and BBX Capital

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

The idea behind Investor AB ser and BBX Capital 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.