Correlation Between Momentus and BKSY WT

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

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

Diversification Opportunities for Momentus and BKSY WT

0.62

Correlation Coefficient

Momentus  BKSY WT

Poor diversification

The 3 months correlation between Momentus and BKSY is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Momentus and BKSY WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKSY WT and Momentus 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 Momentus are associated (or correlated) with BKSY WT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKSY WT has no effect on the direction of Momentus i.e., Momentus and BKSY WT go up and down completely randomly.

Pair Corralation between Momentus and BKSY WT

Assuming the 90 days horizon Momentus is expected to generate 2.75 times more return on investment than BKSY WT. However, Momentus is 2.75 times more volatile than BKSY WT. It trades about 0.31 of its potential returns per unit of risk. BKSY WT is currently generating about 0.21 per unit of risk. If you would invest  1.40  in Momentus on October 11, 2024 and sell it today you would earn a total of  5.27  from holding Momentus or generate 376.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Momentus  vs.  BKSY WT

Momentus

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Momentus are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Momentus showed solid returns over the last few months and may actually be approaching a breakup point.

BKSY WT

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BKSY WT are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BKSY WT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Momentus and BKSY WT

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

The idea behind Momentus and BKSY WT 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.