Correlation Between Stellar and BK Variable

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

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

Diversification Opportunities for Stellar and BK Variable

0.71

Correlation Coefficient

Stellar  BK Variable

Poor diversification

The 3 months correlation between Stellar and 0P0000120T is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and BK Variable Internacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BK Variable Internacional and Stellar 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 Stellar are associated (or correlated) with BK Variable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BK Variable Internacional has no effect on the direction of Stellar i.e., Stellar and BK Variable go up and down completely randomly.

Pair Corralation between Stellar and BK Variable

Assuming the 90 days trading horizon Stellar is expected to generate 15.72 times more return on investment than BK Variable. However, Stellar is 15.72 times more volatile than BK Variable Internacional. It trades about 0.24 of its potential returns per unit of risk. BK Variable Internacional is currently generating about 0.05 per unit of risk. If you would invest  9.30  in Stellar on October 12, 2024 and sell it today you would earn a total of  29.70  from holding Stellar or generate 319.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Stellar  vs.  BK Variable Internacional

Stellar

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

BK Variable Internacional

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BK Variable Internacional are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, BK Variable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stellar and BK Variable

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

The idea behind Stellar and BK Variable Internacional 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.