Correlation Between Display Tech and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Display Tech and BGF Retail 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 Display Tech and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Display Tech Co and BGF Retail Co, you can compare the effects of market volatilities on Display Tech and BGF Retail 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 Display Tech with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Display Tech and BGF Retail.
Diversification Opportunities for Display Tech and BGF Retail
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Display and BGF is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Display Tech Co and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail and Display Tech 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 Display Tech Co are associated (or correlated) with BGF Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Retail has no effect on the direction of Display Tech i.e., Display Tech and BGF Retail go up and down completely randomly.
Pair Corralation between Display Tech and BGF Retail
Assuming the 90 days trading horizon Display Tech Co is expected to under-perform the BGF Retail. But the stock apears to be less risky and, when comparing its historical volatility, Display Tech Co is 1.87 times less risky than BGF Retail. The stock trades about -0.32 of its potential returns per unit of risk. The BGF Retail Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 11,200,000 in BGF Retail Co on August 29, 2024 and sell it today you would lose (500,000) from holding BGF Retail Co or give up 4.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Display Tech Co vs. BGF Retail Co
Performance |
| Timeline |
| Display Tech |
| BGF Retail |
Display Tech and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Display Tech and BGF Retail
The main advantage of trading using opposite Display Tech and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Display Tech position performs unexpectedly, BGF Retail 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 BGF Retail will offset losses from the drop in BGF Retail's long position.| Display Tech vs. AptaBio Therapeutics | Display Tech vs. Daewoo SBI SPAC | Display Tech vs. Dream Security co | Display Tech vs. Microfriend |
| BGF Retail vs. AptaBio Therapeutics | BGF Retail vs. Daewoo SBI SPAC | BGF Retail vs. Dream Security co | BGF Retail vs. Microfriend |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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