Correlation Between Bread Financial and Clave Indices
Can any of the company-specific risk be diversified away by investing in both Bread Financial and Clave Indices 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 Bread Financial and Clave Indices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bread Financial Holdings and Clave Indices De, you can compare the effects of market volatilities on Bread Financial and Clave Indices 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 Bread Financial with a short position of Clave Indices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bread Financial and Clave Indices.
Diversification Opportunities for Bread Financial and Clave Indices
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bread and Clave is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bread Financial Holdings and Clave Indices De in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clave Indices De and Bread Financial 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 Bread Financial Holdings are associated (or correlated) with Clave Indices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clave Indices De has no effect on the direction of Bread Financial i.e., Bread Financial and Clave Indices go up and down completely randomly.
Pair Corralation between Bread Financial and Clave Indices
Assuming the 90 days trading horizon Bread Financial Holdings is expected to generate 4.1 times more return on investment than Clave Indices. However, Bread Financial is 4.1 times more volatile than Clave Indices De. It trades about 0.04 of its potential returns per unit of risk. Clave Indices De is currently generating about -0.04 per unit of risk. If you would invest 7,942 in Bread Financial Holdings on August 28, 2024 and sell it today you would earn a total of 394.00 from holding Bread Financial Holdings or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bread Financial Holdings vs. Clave Indices De
Performance |
| Timeline |
| Bread Financial Holdings |
| Clave Indices De |
Bread Financial and Clave Indices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bread Financial and Clave Indices
The main advantage of trading using opposite Bread Financial and Clave Indices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bread Financial position performs unexpectedly, Clave Indices 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 Clave Indices will offset losses from the drop in Clave Indices' long position.| Bread Financial vs. Fras le SA | Bread Financial vs. Clave Indices De | Bread Financial vs. BTG Pactual Logstica | Bread Financial vs. Telefonaktiebolaget LM Ericsson |
| Clave Indices vs. Taiwan Semiconductor Manufacturing | Clave Indices vs. Fras le SA | Clave Indices vs. BTG Pactual Logstica | Clave Indices vs. Telefonaktiebolaget LM Ericsson |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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