Correlation Between System1 and BBAI WT

Can any of the company-specific risk be diversified away by investing in both System1 and BBAI 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 System1 and BBAI WT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between System1 and BBAI WT, you can compare the effects of market volatilities on System1 and BBAI 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 System1 with a short position of BBAI WT. Check out your portfolio center. Please also check ongoing floating volatility patterns of System1 and BBAI WT.

Diversification Opportunities for System1 and BBAI WT

-0.8

Correlation Coefficient

System1  BBAI WT

Pay attention - limited upside

The 3 months correlation between System1 and BBAI is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding System1 and BBAI WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBAI WT and System1 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 System1 are associated (or correlated) with BBAI WT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBAI WT has no effect on the direction of System1 i.e., System1 and BBAI WT go up and down completely randomly.

Pair Corralation between System1 and BBAI WT

Considering the 90-day investment horizon System1 is expected to under-perform the BBAI WT. But the etf apears to be less risky and, when comparing its historical volatility, System1 is 2.87 times less risky than BBAI WT. The etf trades about -0.07 of its potential returns per unit of risk. The BBAI WT is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  15.00  in BBAI WT on September 30, 2024 and sell it today you would earn a total of  130.00  from holding BBAI WT or generate 866.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

System1  vs.  BBAI WT

System1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days System1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

BBAI WT

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BBAI WT are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, BBAI WT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with System1 and BBAI WT

The main advantage of trading using opposite System1 and BBAI WT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System1 position performs unexpectedly, BBAI 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 BBAI WT will offset losses from the drop in BBAI WT's long position.

The idea behind System1 and BBAI 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.