Correlation Between Ballantyne Strong and Drive Shack

Can any of the company-specific risk be diversified away by investing in both Ballantyne Strong and Drive Shack 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 Ballantyne Strong and Drive Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ballantyne Strong and Drive Shack, you can compare the effects of market volatilities on Ballantyne Strong and Drive Shack 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 Ballantyne Strong with a short position of Drive Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ballantyne Strong and Drive Shack.

Diversification Opportunities for Ballantyne Strong and Drive Shack

0.05

Correlation Coefficient

Ballantyne Strong  Drive Shack

Significant diversification

The 3 months correlation between Ballantyne and Drive is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ballantyne Strong and Drive Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drive Shack and Ballantyne Strong 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 Ballantyne Strong are associated (or correlated) with Drive Shack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drive Shack has no effect on the direction of Ballantyne Strong i.e., Ballantyne Strong and Drive Shack go up and down completely randomly.

Pair Corralation between Ballantyne Strong and Drive Shack

If you would invest  38.00  in Drive Shack on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Drive Shack or generate 0.0% return on investment over 90 days.

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

Ballantyne Strong  vs.  Drive Shack

Ballantyne Strong

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ballantyne Strong has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Ballantyne Strong is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Drive Shack

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Drive Shack has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Drive Shack is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ballantyne Strong and Drive Shack

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

The idea behind Ballantyne Strong and Drive Shack 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.