Correlation Between Bread Financial and Fras Le
Can any of the company-specific risk be diversified away by investing in both Bread Financial and Fras Le 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 Fras Le 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 Fras le SA, you can compare the effects of market volatilities on Bread Financial and Fras Le 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 Fras Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bread Financial and Fras Le.
Diversification Opportunities for Bread Financial and Fras Le
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bread and Fras is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bread Financial Holdings and Fras le SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fras le SA 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 Fras Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fras le SA has no effect on the direction of Bread Financial i.e., Bread Financial and Fras Le go up and down completely randomly.
Pair Corralation between Bread Financial and Fras Le
Assuming the 90 days trading horizon Bread Financial Holdings is expected to generate 2.87 times more return on investment than Fras Le. However, Bread Financial is 2.87 times more volatile than Fras le SA. It trades about 0.17 of its potential returns per unit of risk. Fras le SA is currently generating about -0.18 per unit of risk. If you would invest 7,253 in Bread Financial Holdings on August 28, 2024 and sell it today you would earn a total of 1,083 from holding Bread Financial Holdings or generate 14.93% 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. Fras le SA
Performance |
| Timeline |
| Bread Financial Holdings |
| Fras le SA |
Bread Financial and Fras Le Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bread Financial and Fras Le
The main advantage of trading using opposite Bread Financial and Fras Le positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bread Financial position performs unexpectedly, Fras Le 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 Fras Le will offset losses from the drop in Fras Le's 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 |
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.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |