Correlation Between BRC and YOU
Can any of the company-specific risk be diversified away by investing in both BRC and YOU 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 BRC and YOU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRC and YOU, you can compare the effects of market volatilities on BRC and YOU 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 BRC with a short position of YOU. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRC and YOU.
Diversification Opportunities for BRC and YOU
Excellent diversification
The 3 months correlation between BRC and YOU is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding BRC and YOU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YOU and BRC 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 BRC are associated (or correlated) with YOU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YOU has no effect on the direction of BRC i.e., BRC and YOU go up and down completely randomly.
Pair Corralation between BRC and YOU
Assuming the 90 days trading horizon BRC is expected to under-perform the YOU. But the crypto coin apears to be less risky and, when comparing its historical volatility, BRC is 1.91 times less risky than YOU. The crypto coin trades about -0.01 of its potential returns per unit of risk. The YOU is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 0.35 in YOU on January 26, 2024 and sell it today you would lose (0.33) from holding YOU or give up 93.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 70.76% |
| Values | Daily Returns |
BRC vs. YOU
Performance |
| Timeline |
| BRC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| YOU |
BRC and YOU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRC and YOU
The main advantage of trading using opposite BRC and YOU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRC position performs unexpectedly, YOU 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 YOU will offset losses from the drop in YOU's long position.The idea behind BRC and YOU 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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