Correlation Between Barrett Business and Evertz Technologies

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

By analyzing existing cross correlation between Barrett Business Services and Evertz Technologies Limited, you can compare the effects of market volatilities on Barrett Business and Evertz Technologies 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 Barrett Business with a short position of Evertz Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrett Business and Evertz Technologies.

Diversification Opportunities for Barrett Business and Evertz Technologies

-0.2

Correlation Coefficient

Barrett Business  Evertz Technologies

Good diversification

The 3 months correlation between Barrett and Evertz is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Barrett Business Services and Evertz Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertz Technologies and Barrett Business 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 Barrett Business Services are associated (or correlated) with Evertz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertz Technologies has no effect on the direction of Barrett Business i.e., Barrett Business and Evertz Technologies go up and down completely randomly.

Pair Corralation between Barrett Business and Evertz Technologies

Given the investment horizon of 90 days Barrett Business Services is expected to generate 0.96 times more return on investment than Evertz Technologies. However, Barrett Business Services is 1.04 times less risky than Evertz Technologies. It trades about -0.17 of its potential returns per unit of risk. Evertz Technologies Limited is currently generating about -0.38 per unit of risk. If you would invest  12,666  in Barrett Business Services on January 29, 2024 and sell it today you would lose (489.00) from holding Barrett Business Services or give up 3.86% of portfolio value over 90 days.

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

Barrett Business Services  vs.  Evertz Technologies Limited

Barrett Business Services

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Barrett Business Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Barrett Business may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Evertz Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evertz Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Evertz Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Barrett Business and Evertz Technologies

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

The idea behind Barrett Business Services and Evertz Technologies Limited 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.