Correlation Between Europe 125x and Bbh Intermediate

Can any of the company-specific risk be diversified away by investing in both Europe 125x and Bbh Intermediate 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 Europe 125x and Bbh Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Europe 125x Strategy and Bbh Intermediate Municipal, you can compare the effects of market volatilities on Europe 125x and Bbh Intermediate 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 Europe 125x with a short position of Bbh Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europe 125x and Bbh Intermediate.

Diversification Opportunities for Europe 125x and Bbh Intermediate

0.32

Correlation Coefficient

Europe 125x  Bbh Intermediate

Weak diversification

The 3 months correlation between Europe and Bbh is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Europe 125x Strategy and Bbh Intermediate Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bbh Intermediate Mun and Europe 125x 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 Europe 125x Strategy are associated (or correlated) with Bbh Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bbh Intermediate Mun has no effect on the direction of Europe 125x i.e., Europe 125x and Bbh Intermediate go up and down completely randomly.

Pair Corralation between Europe 125x and Bbh Intermediate

Assuming the 90 days horizon Europe 125x Strategy is expected to under-perform the Bbh Intermediate. In addition to that, Europe 125x is 13.6 times more volatile than Bbh Intermediate Municipal. It trades about -0.32 of its total potential returns per unit of risk. Bbh Intermediate Municipal is currently generating about -0.34 per unit of volatility. If you would invest  1,039  in Bbh Intermediate Municipal on October 9, 2024 and sell it today you would lose (13.00) from holding Bbh Intermediate Municipal or give up 1.25% of portfolio value over 90 days.

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

Europe 125x Strategy  vs.  Bbh Intermediate Municipal

Europe 125x Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europe 125x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Bbh Intermediate Mun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bbh Intermediate Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Bbh Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Europe 125x and Bbh Intermediate

The main advantage of trading using opposite Europe 125x and Bbh Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europe 125x position performs unexpectedly, Bbh Intermediate 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 Bbh Intermediate will offset losses from the drop in Bbh Intermediate's long position.

The idea behind Europe 125x Strategy and Bbh Intermediate Municipal 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.