Correlation Between Cornerstone Building and BP PLC
Can any of the company-specific risk be diversified away by investing in both Cornerstone Building and BP PLC 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 Cornerstone Building and BP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornerstone Building Brands and BP PLC ADR, you can compare the effects of market volatilities on Cornerstone Building and BP PLC 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 Cornerstone Building with a short position of BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Building and BP PLC.
Diversification Opportunities for Cornerstone Building and BP PLC
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cornerstone and BP PLC is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Building Brands and BP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC ADR and Cornerstone Building 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 Cornerstone Building Brands are associated (or correlated) with BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC ADR has no effect on the direction of Cornerstone Building i.e., Cornerstone Building and BP PLC go up and down completely randomly.
Pair Corralation between Cornerstone Building and BP PLC
If you would invest 3,539 in BP PLC ADR on January 24, 2024 and sell it today you would earn a total of 352.00 from holding BP PLC ADR or generate 9.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.54% |
| Values | Daily Returns |
Cornerstone Building Brands vs. BP PLC ADR
Performance |
| Timeline |
| Cornerstone Building |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BP PLC ADR |
Cornerstone Building and BP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornerstone Building and BP PLC
The main advantage of trading using opposite Cornerstone Building and BP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Building position performs unexpectedly, BP PLC 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 BP PLC will offset losses from the drop in BP PLC's long position.| Cornerstone Building vs. Ardelyx | Cornerstone Building vs. Luxfer Holdings PLC | Cornerstone Building vs. Viemed Healthcare | Cornerstone Building vs. Cytek Biosciences |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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