Correlation Between Rand Capital and Bridgetown Holdings

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

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

Diversification Opportunities for Rand Capital and Bridgetown Holdings

0.0

Correlation Coefficient

Rand Capital  Bridgetown Holdings

Pay attention - limited upside

The 3 months correlation between Rand and Bridgetown is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and Bridgetown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgetown Holdings and Rand Capital 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 Rand Capital Corp are associated (or correlated) with Bridgetown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgetown Holdings has no effect on the direction of Rand Capital i.e., Rand Capital and Bridgetown Holdings go up and down completely randomly.

Pair Corralation between Rand Capital and Bridgetown Holdings

Given the investment horizon of 90 days Rand Capital is expected to generate 3.0 times less return on investment than Bridgetown Holdings. But when comparing it to its historical volatility, Rand Capital Corp is 3.34 times less risky than Bridgetown Holdings. It trades about 0.06 of its potential returns per unit of risk. Bridgetown Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Bridgetown Holdings on October 4, 2024 and sell it today you would earn a total of  1.00  from holding Bridgetown Holdings or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	29.91%
Values	Daily Returns

Rand Capital Corp  vs.  Bridgetown Holdings

Rand Capital Corp

Risk-Adjusted Performance

14 of 100

Good

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

Bridgetown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bridgetown Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Bridgetown Holdings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Rand Capital and Bridgetown Holdings

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

The idea behind Rand Capital Corp and Bridgetown 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.