Correlation Between Berkshire Grey and American Superconductor

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Can any of the company-specific risk be diversified away by investing in both Berkshire Grey and American Superconductor 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 Berkshire Grey and American Superconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Grey and American Superconductor, you can compare the effects of market volatilities on Berkshire Grey and American Superconductor 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 Berkshire Grey with a short position of American Superconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Grey and American Superconductor.

Diversification Opportunities for Berkshire Grey and American Superconductor

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Berkshire and American is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Grey and American Superconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Superconductor and Berkshire Grey 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 Berkshire Grey are associated (or correlated) with American Superconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Superconductor has no effect on the direction of Berkshire Grey i.e., Berkshire Grey and American Superconductor go up and down completely randomly.

Pair Corralation between Berkshire Grey and American Superconductor

Given the investment horizon of 90 days Berkshire Grey is expected to generate 7.96 times less return on investment than American Superconductor. In addition to that, Berkshire Grey is 1.13 times more volatile than American Superconductor. It trades about 0.01 of its total potential returns per unit of risk. American Superconductor is currently generating about 0.05 per unit of volatility. If you would invest  704.00  in American Superconductor on December 29, 2023 and sell it today you would earn a total of  641.00  from holding American Superconductor or generate 91.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy64.98%
ValuesDaily Returns

Berkshire Grey  vs.  American Superconductor

 Performance 
       Timeline  
Berkshire Grey 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Berkshire Grey has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Berkshire Grey is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
American Superconductor 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in American Superconductor are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, American Superconductor exhibited solid returns over the last few months and may actually be approaching a breakup point.

Berkshire Grey and American Superconductor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Berkshire Grey and American Superconductor

The main advantage of trading using opposite Berkshire Grey and American Superconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Grey position performs unexpectedly, American Superconductor 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 American Superconductor will offset losses from the drop in American Superconductor's long position.
The idea behind Berkshire Grey and American Superconductor 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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