Correlation Between Mativ Holdings and Bt Brands

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

By analyzing existing cross correlation between Mativ Holdings and Bt Brands, you can compare the effects of market volatilities on Mativ Holdings and Bt Brands 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 Mativ Holdings with a short position of Bt Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mativ Holdings and Bt Brands.

Diversification Opportunities for Mativ Holdings and Bt Brands

0.26

Correlation Coefficient

Mativ Holdings  Bt Brands

Modest diversification

The 3 months correlation between Mativ and BTBD is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Mativ Holdings and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands and Mativ Holdings 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 Mativ Holdings are associated (or correlated) with Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of Mativ Holdings i.e., Mativ Holdings and Bt Brands go up and down completely randomly.

Pair Corralation between Mativ Holdings and Bt Brands

Given the investment horizon of 90 days Mativ Holdings is expected to under-perform the Bt Brands. But the stock apears to be less risky and, when comparing its historical volatility, Mativ Holdings is 1.34 times less risky than Bt Brands. The stock trades about -0.16 of its potential returns per unit of risk. The Bt Brands is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  159.00  in Bt Brands on December 27, 2024 and sell it today you would lose (24.00) from holding Bt Brands or give up 15.09% of portfolio value over 90 days.

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

Mativ Holdings  vs.  Bt Brands

Mativ Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mativ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Bt Brands

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Mativ Holdings and Bt Brands

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

The idea behind Mativ Holdings and Bt Brands 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.