Correlation Between Aig Government and Bridge Builder

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

By analyzing existing cross correlation between Aig Government Money and Bridge Builder International, you can compare the effects of market volatilities on Aig Government and Bridge Builder 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 Aig Government with a short position of Bridge Builder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Bridge Builder.

Diversification Opportunities for Aig Government and Bridge Builder

0.67

Correlation Coefficient

Aig Government  Bridge Builder

Poor diversification

The 3 months correlation between Aig and Bridge is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Bridge Builder International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Builder Inter and Aig Government 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 Aig Government Money are associated (or correlated) with Bridge Builder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Builder Inter has no effect on the direction of Aig Government i.e., Aig Government and Bridge Builder go up and down completely randomly.

Pair Corralation between Aig Government and Bridge Builder

Assuming the 90 days horizon Aig Government Money is expected to generate 0.35 times more return on investment than Bridge Builder. However, Aig Government Money is 2.84 times less risky than Bridge Builder. It trades about 0.19 of its potential returns per unit of risk. Bridge Builder International is currently generating about 0.02 per unit of risk. If you would invest  1,006  in Aig Government Money on September 5, 2024 and sell it today you would earn a total of  10.00  from holding Aig Government Money or generate 0.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Aig Government Money  vs.  Bridge Builder International

Aig Government Money

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bridge Builder Inter

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aig Government and Bridge Builder

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

The idea behind Aig Government Money and Bridge Builder International 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.