Correlation Between BYD and FinecoBank SpA
Can any of the company-specific risk be diversified away by investing in both BYD and FinecoBank SpA 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 BYD and FinecoBank SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co and FinecoBank SpA, you can compare the effects of market volatilities on BYD and FinecoBank SpA 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 BYD with a short position of FinecoBank SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD and FinecoBank SpA.
Diversification Opportunities for BYD and FinecoBank SpA
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BYD and FinecoBank is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and FinecoBank SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FinecoBank SpA and BYD 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 BYD Co are associated (or correlated) with FinecoBank SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FinecoBank SpA has no effect on the direction of BYD i.e., BYD and FinecoBank SpA go up and down completely randomly.
Pair Corralation between BYD and FinecoBank SpA
Assuming the 90 days trading horizon BYD Co is expected to generate 10.3 times more return on investment than FinecoBank SpA. However, BYD is 10.3 times more volatile than FinecoBank SpA. It trades about 0.05 of its potential returns per unit of risk. FinecoBank SpA is currently generating about 0.03 per unit of risk. If you would invest 3,505 in BYD Co on October 25, 2024 and sell it today you would earn a total of 55.00 from holding BYD Co or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Co vs. FinecoBank SpA
Performance |
| Timeline |
| BYD Co |
| FinecoBank SpA |
BYD and FinecoBank SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD and FinecoBank SpA
The main advantage of trading using opposite BYD and FinecoBank SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD position performs unexpectedly, FinecoBank SpA 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 FinecoBank SpA will offset losses from the drop in FinecoBank SpA's long position.| BYD vs. LBG Media PLC | BYD vs. Synthomer plc | BYD vs. G5 Entertainment AB | BYD vs. Ecclesiastical Insurance Office |
| FinecoBank SpA vs. United Utilities Group | FinecoBank SpA vs. BW Offshore | FinecoBank SpA vs. BE Semiconductor Industries | FinecoBank SpA vs. Ecofin Global Utilities |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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