Correlation Between BC IRON and KRISPY KREME
Can any of the company-specific risk be diversified away by investing in both BC IRON and KRISPY KREME 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 BC IRON and KRISPY KREME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BC IRON and KRISPY KREME DL 01, you can compare the effects of market volatilities on BC IRON and KRISPY KREME 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 BC IRON with a short position of KRISPY KREME. Check out your portfolio center. Please also check ongoing floating volatility patterns of BC IRON and KRISPY KREME.
Diversification Opportunities for BC IRON and KRISPY KREME
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BC3 and KRISPY is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding BC IRON and KRISPY KREME DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KRISPY KREME DL and BC IRON 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 BC IRON are associated (or correlated) with KRISPY KREME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KRISPY KREME DL has no effect on the direction of BC IRON i.e., BC IRON and KRISPY KREME go up and down completely randomly.
Pair Corralation between BC IRON and KRISPY KREME
Assuming the 90 days trading horizon BC IRON is expected to generate 1.27 times more return on investment than KRISPY KREME. However, BC IRON is 1.27 times more volatile than KRISPY KREME DL 01. It trades about 0.01 of its potential returns per unit of risk. KRISPY KREME DL 01 is currently generating about 0.0 per unit of risk. If you would invest 18.00 in BC IRON on October 16, 2024 and sell it today you would lose (2.00) from holding BC IRON or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BC IRON vs. KRISPY KREME DL 01
Performance |
| Timeline |
| BC IRON |
| KRISPY KREME DL |
BC IRON and KRISPY KREME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BC IRON and KRISPY KREME
The main advantage of trading using opposite BC IRON and KRISPY KREME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BC IRON position performs unexpectedly, KRISPY KREME 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 KRISPY KREME will offset losses from the drop in KRISPY KREME's long position.| BC IRON vs. BW OFFSHORE LTD | BC IRON vs. Gold Road Resources | BC IRON vs. Texas Roadhouse | BC IRON vs. Broadridge Financial Solutions |
| KRISPY KREME vs. ANGANG STEEL H | KRISPY KREME vs. TIANDE CHEMICAL | KRISPY KREME vs. GRUPO CARSO A1 | KRISPY KREME vs. BC IRON |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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