Correlation Between BBB Foods and Coursera

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

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

Diversification Opportunities for BBB Foods and Coursera

0.81

Correlation Coefficient

BBB Foods  Coursera

Very poor diversification

The 3 months correlation between BBB and Coursera is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Coursera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coursera and BBB Foods 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 BBB Foods are associated (or correlated) with Coursera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coursera has no effect on the direction of BBB Foods i.e., BBB Foods and Coursera go up and down completely randomly.

Pair Corralation between BBB Foods and Coursera

Given the investment horizon of 90 days BBB Foods is expected to generate 0.73 times more return on investment than Coursera. However, BBB Foods is 1.38 times less risky than Coursera. It trades about -0.06 of its potential returns per unit of risk. Coursera is currently generating about -0.05 per unit of risk. If you would invest  2,989  in BBB Foods on December 25, 2024 and sell it today you would lose (302.00) from holding BBB Foods or give up 10.1% of portfolio value over 90 days.

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

BBB Foods  vs.  Coursera

BBB Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Coursera

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coursera has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with BBB Foods and Coursera

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

The idea behind BBB Foods and Coursera 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 Transaction History module to view history of all your transactions and understand their impact on performance.