Correlation Between Thunder Bridge and SIGNA Sports

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Can any of the company-specific risk be diversified away by investing in both Thunder Bridge and SIGNA Sports 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 Thunder Bridge and SIGNA Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thunder Bridge Capital and SIGNA Sports United, you can compare the effects of market volatilities on Thunder Bridge and SIGNA Sports 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 Thunder Bridge with a short position of SIGNA Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thunder Bridge and SIGNA Sports.

Diversification Opportunities for Thunder Bridge and SIGNA Sports

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Thunder and SIGNA is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Thunder Bridge Capital and SIGNA Sports United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIGNA Sports United and Thunder Bridge 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 Thunder Bridge Capital are associated (or correlated) with SIGNA Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIGNA Sports United has no effect on the direction of Thunder Bridge i.e., Thunder Bridge and SIGNA Sports go up and down completely randomly.

Pair Corralation between Thunder Bridge and SIGNA Sports

If you would invest  1,075  in Thunder Bridge Capital on September 29, 2024 and sell it today you would earn a total of  167.00  from holding Thunder Bridge Capital or generate 15.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy0.87%
ValuesDaily Returns

Thunder Bridge Capital  vs.  SIGNA Sports United

 Performance 
       Timeline  
Thunder Bridge Capital 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
OK
Over the last 90 days Thunder Bridge Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively inconsistent basic indicators, Thunder Bridge unveiled solid returns over the last few months and may actually be approaching a breakup point.
SIGNA Sports United 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SIGNA Sports United has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SIGNA Sports is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Thunder Bridge and SIGNA Sports Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Thunder Bridge and SIGNA Sports

The main advantage of trading using opposite Thunder Bridge and SIGNA Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thunder Bridge position performs unexpectedly, SIGNA Sports 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 SIGNA Sports will offset losses from the drop in SIGNA Sports' long position.
The idea behind Thunder Bridge Capital and SIGNA Sports United 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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