Correlation Between Bbh Partner and Cabana Target

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

By analyzing existing cross correlation between Bbh Partner Fund and Cabana Target Drawdown, you can compare the effects of market volatilities on Bbh Partner and Cabana Target 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 Bbh Partner with a short position of Cabana Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bbh Partner and Cabana Target.

Diversification Opportunities for Bbh Partner and Cabana Target

0.82

Correlation Coefficient

Bbh Partner  Cabana Target

Very poor diversification

The 3 months correlation between Bbh and Cabana is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bbh Partner Fund and Cabana Target Drawdown in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabana Target Drawdown and Bbh Partner 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 Bbh Partner Fund are associated (or correlated) with Cabana Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabana Target Drawdown has no effect on the direction of Bbh Partner i.e., Bbh Partner and Cabana Target go up and down completely randomly.

Pair Corralation between Bbh Partner and Cabana Target

Assuming the 90 days horizon Bbh Partner Fund is expected to under-perform the Cabana Target. In addition to that, Bbh Partner is 2.17 times more volatile than Cabana Target Drawdown. It trades about -0.23 of its total potential returns per unit of risk. Cabana Target Drawdown is currently generating about -0.14 per unit of volatility. If you would invest  2,190  in Cabana Target Drawdown on January 26, 2024 and sell it today you would lose (23.00) from holding Cabana Target Drawdown or give up 1.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Bbh Partner Fund  vs.  Cabana Target Drawdown

Bbh Partner Fund

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bbh Partner Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Bbh Partner is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cabana Target Drawdown

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cabana Target Drawdown are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cabana Target is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bbh Partner and Cabana Target

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

The idea behind Bbh Partner Fund and Cabana Target Drawdown 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.