Correlation Between 8Common and BKI Investment
Can any of the company-specific risk be diversified away by investing in both 8Common and BKI Investment 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 8Common and BKI Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 8Common and BKI Investment, you can compare the effects of market volatilities on 8Common and BKI Investment 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 8Common with a short position of BKI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of 8Common and BKI Investment.
Diversification Opportunities for 8Common and BKI Investment
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 8Common and BKI is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding 8Common and BKI Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKI Investment and 8Common 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 8Common are associated (or correlated) with BKI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKI Investment has no effect on the direction of 8Common i.e., 8Common and BKI Investment go up and down completely randomly.
Pair Corralation between 8Common and BKI Investment
Assuming the 90 days trading horizon 8Common is expected to under-perform the BKI Investment. In addition to that, 8Common is 10.2 times more volatile than BKI Investment. It trades about -0.02 of its total potential returns per unit of risk. BKI Investment is currently generating about 0.0 per unit of volatility. If you would invest 172.00 in BKI Investment on August 28, 2024 and sell it today you would earn a total of 0.00 from holding BKI Investment or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
8Common vs. BKI Investment
Performance |
| Timeline |
| 8Common |
| BKI Investment |
8Common and BKI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 8Common and BKI Investment
The main advantage of trading using opposite 8Common and BKI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 8Common position performs unexpectedly, BKI Investment 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 BKI Investment will offset losses from the drop in BKI Investment's long position.| 8Common vs. Westpac Banking | 8Common vs. Qbe Insurance Group | 8Common vs. Wt Financial Group | 8Common vs. Macquarie Bank Limited |
| BKI Investment vs. Australian Foundation Investment | BKI Investment vs. GQG Partners DRC | BKI Investment vs. Metrics Master Income | BKI Investment vs. L1 Long Short |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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