Correlation Between Team and Bryn Resources

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

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

Diversification Opportunities for Team and Bryn Resources

0.03

Correlation Coefficient

Team  Bryn Resources

Significant diversification

The 3 months correlation between Team and Bryn is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Team Inc and Bryn Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bryn Resources and Team 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 Team Inc are associated (or correlated) with Bryn Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bryn Resources has no effect on the direction of Team i.e., Team and Bryn Resources go up and down completely randomly.

Pair Corralation between Team and Bryn Resources

Given the investment horizon of 90 days Team is expected to generate 61.2 times less return on investment than Bryn Resources. But when comparing it to its historical volatility, Team Inc is 25.43 times less risky than Bryn Resources. It trades about 0.08 of its potential returns per unit of risk. Bryn Resources is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  0.21  in Bryn Resources on December 26, 2024 and sell it today you would earn a total of  0.94  from holding Bryn Resources or generate 447.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Team Inc  vs.  Bryn Resources

Team Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Team Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Team demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Bryn Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bryn Resources are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Bryn Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Team and Bryn Resources

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

The idea behind Team Inc and Bryn Resources 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.