Correlation Between BBB Foods and CTS

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Can any of the company-specific risk be diversified away by investing in both BBB Foods and CTS 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 CTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and CTS Corporation, you can compare the effects of market volatilities on BBB Foods and CTS 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 CTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and CTS.

Diversification Opportunities for BBB Foods and CTS

BBBCTSDiversified AwayBBBCTSDiversified Away100%
-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between BBB and CTS is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation 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 CTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Corporation has no effect on the direction of BBB Foods i.e., BBB Foods and CTS go up and down completely randomly.

Pair Corralation between BBB Foods and CTS

Given the investment horizon of 90 days BBB Foods is expected to under-perform the CTS. In addition to that, BBB Foods is 1.2 times more volatile than CTS Corporation. It trades about 0.0 of its total potential returns per unit of risk. CTS Corporation is currently generating about 0.03 per unit of volatility. If you would invest  4,845  in CTS Corporation on October 13, 2024 and sell it today you would earn a total of  145.00  from holding CTS Corporation or generate 2.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BBB Foods  vs.  CTS Corp.

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -10-505101520
JavaScript chart by amCharts 3.21.15TBBB CTS
       Timeline  
BBB Foods 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, BBB Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2829303132333435
CTS Corporation 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in CTS Corporation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CTS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan48505254565860

BBB Foods and CTS Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.7-6.51-4.33-2.150.02.134.346.558.7610.96 0.010.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15TBBB CTS
       Returns  

Pair Trading with BBB Foods and CTS

The main advantage of trading using opposite BBB Foods and CTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, CTS 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 CTS will offset losses from the drop in CTS's long position.
The idea behind BBB Foods and CTS Corporation 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.
Check out your portfolio center.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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