Correlation Between BGF Retail and PlayD
Can any of the company-specific risk be diversified away by investing in both BGF Retail and PlayD 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 BGF Retail and PlayD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BGF Retail Co and PlayD Co, you can compare the effects of market volatilities on BGF Retail and PlayD 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 BGF Retail with a short position of PlayD. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Retail and PlayD.
Diversification Opportunities for BGF Retail and PlayD
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BGF and PlayD is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BGF Retail Co and PlayD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayD and BGF Retail 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 BGF Retail Co are associated (or correlated) with PlayD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayD has no effect on the direction of BGF Retail i.e., BGF Retail and PlayD go up and down completely randomly.
Pair Corralation between BGF Retail and PlayD
Assuming the 90 days trading horizon BGF Retail Co is expected to under-perform the PlayD. But the stock apears to be less risky and, when comparing its historical volatility, BGF Retail Co is 2.12 times less risky than PlayD. The stock trades about -0.05 of its potential returns per unit of risk. The PlayD Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 536,000 in PlayD Co on August 29, 2024 and sell it today you would earn a total of 49,000 from holding PlayD Co or generate 9.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BGF Retail Co vs. PlayD Co
Performance |
| Timeline |
| BGF Retail |
| PlayD |
BGF Retail and PlayD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BGF Retail and PlayD
The main advantage of trading using opposite BGF Retail and PlayD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BGF Retail position performs unexpectedly, PlayD 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 PlayD will offset losses from the drop in PlayD's long position.| BGF Retail vs. Samsung Electronics Co | BGF Retail vs. Samsung Electronics Co | BGF Retail vs. Hyundai Motor Co | BGF Retail vs. Hyundai Motor |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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