Correlation Between Thunder Tiger and Bonny Worldwide
Can any of the company-specific risk be diversified away by investing in both Thunder Tiger and Bonny Worldwide 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 Thunder Tiger and Bonny Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thunder Tiger Corp and Bonny Worldwide, you can compare the effects of market volatilities on Thunder Tiger and Bonny Worldwide 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 Thunder Tiger with a short position of Bonny Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thunder Tiger and Bonny Worldwide.
Diversification Opportunities for Thunder Tiger and Bonny Worldwide
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Thunder and Bonny is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Thunder Tiger Corp and Bonny Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonny Worldwide and Thunder Tiger 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 Thunder Tiger Corp are associated (or correlated) with Bonny Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonny Worldwide has no effect on the direction of Thunder Tiger i.e., Thunder Tiger and Bonny Worldwide go up and down completely randomly.
Pair Corralation between Thunder Tiger and Bonny Worldwide
Assuming the 90 days trading horizon Thunder Tiger Corp is expected to generate 0.75 times more return on investment than Bonny Worldwide. However, Thunder Tiger Corp is 1.33 times less risky than Bonny Worldwide. It trades about 0.0 of its potential returns per unit of risk. Bonny Worldwide is currently generating about -0.24 per unit of risk. If you would invest 6,870 in Thunder Tiger Corp on November 4, 2024 and sell it today you would lose (10.00) from holding Thunder Tiger Corp or give up 0.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thunder Tiger Corp vs. Bonny Worldwide
Performance |
| Timeline |
| Thunder Tiger Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Bonny Worldwide |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Thunder Tiger and Bonny Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thunder Tiger and Bonny Worldwide
The main advantage of trading using opposite Thunder Tiger and Bonny Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thunder Tiger position performs unexpectedly, Bonny Worldwide 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 Bonny Worldwide will offset losses from the drop in Bonny Worldwide's long position.The idea behind Thunder Tiger Corp and Bonny Worldwide 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.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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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