Correlation Between Salon City and Broadstone Net

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

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

Diversification Opportunities for Salon City and Broadstone Net

0.0

Correlation Coefficient

Salon City  Broadstone Net

Pay attention - limited upside

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

Pair Corralation between Salon City and Broadstone Net

If you would invest  1,549  in Broadstone Net Lease on September 22, 2024 and sell it today you would earn a total of  58.00  from holding Broadstone Net Lease or generate 3.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Salon City  vs.  Broadstone Net Lease

Salon City

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Salon City has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Salon City is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Salon City and Broadstone Net

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

The idea behind Salon City and Broadstone Net Lease 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.