Correlation Between Big Bird and Century Insurance
Can any of the company-specific risk be diversified away by investing in both Big Bird and Century Insurance 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 Big Bird and Century Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Bird Foods and Century Insurance, you can compare the effects of market volatilities on Big Bird and Century Insurance 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 Big Bird with a short position of Century Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Bird and Century Insurance.
Diversification Opportunities for Big Bird and Century Insurance
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Big and Century is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Big Bird Foods and Century Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Insurance and Big Bird 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 Big Bird Foods are associated (or correlated) with Century Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Insurance has no effect on the direction of Big Bird i.e., Big Bird and Century Insurance go up and down completely randomly.
Pair Corralation between Big Bird and Century Insurance
Assuming the 90 days trading horizon Big Bird Foods is expected to under-perform the Century Insurance. In addition to that, Big Bird is 1.29 times more volatile than Century Insurance. It trades about -0.13 of its total potential returns per unit of risk. Century Insurance is currently generating about 0.34 per unit of volatility. If you would invest 3,050 in Century Insurance on August 25, 2024 and sell it today you would earn a total of 550.00 from holding Century Insurance or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Bird Foods vs. Century Insurance
Performance |
| Timeline |
| Big Bird Foods |
| Century Insurance |
Big Bird and Century Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Bird and Century Insurance
The main advantage of trading using opposite Big Bird and Century Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Bird position performs unexpectedly, Century Insurance 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 Century Insurance will offset losses from the drop in Century Insurance's long position.| Big Bird vs. Habib Insurance | Big Bird vs. Ghandhara Automobile | Big Bird vs. Century Insurance | Big Bird vs. Reliance Weaving Mills |
| Century Insurance vs. Packages | Century Insurance vs. WorldCall Telecom | Century Insurance vs. Air Link Communication | Century Insurance vs. Nimir Industrial Chemical |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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