Correlation Between Brown Forman and BRAEMAR HOTELS
Can any of the company-specific risk be diversified away by investing in both Brown Forman and BRAEMAR HOTELS 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 Brown Forman and BRAEMAR HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brown Forman and BRAEMAR HOTELS RES, you can compare the effects of market volatilities on Brown Forman and BRAEMAR HOTELS 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 Brown Forman with a short position of BRAEMAR HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brown Forman and BRAEMAR HOTELS.
Diversification Opportunities for Brown Forman and BRAEMAR HOTELS
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brown and BRAEMAR is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Brown Forman and BRAEMAR HOTELS RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRAEMAR HOTELS RES and Brown Forman 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 Brown Forman are associated (or correlated) with BRAEMAR HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRAEMAR HOTELS RES has no effect on the direction of Brown Forman i.e., Brown Forman and BRAEMAR HOTELS go up and down completely randomly.
Pair Corralation between Brown Forman and BRAEMAR HOTELS
Assuming the 90 days trading horizon Brown Forman is expected to under-perform the BRAEMAR HOTELS. But the stock apears to be less risky and, when comparing its historical volatility, Brown Forman is 1.48 times less risky than BRAEMAR HOTELS. The stock trades about -0.44 of its potential returns per unit of risk. The BRAEMAR HOTELS RES is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 316.00 in BRAEMAR HOTELS RES on October 9, 2024 and sell it today you would lose (18.00) from holding BRAEMAR HOTELS RES or give up 5.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brown Forman vs. BRAEMAR HOTELS RES
Performance |
| Timeline |
| Brown Forman |
| BRAEMAR HOTELS RES |
Brown Forman and BRAEMAR HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brown Forman and BRAEMAR HOTELS
The main advantage of trading using opposite Brown Forman and BRAEMAR HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brown Forman position performs unexpectedly, BRAEMAR HOTELS 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 BRAEMAR HOTELS will offset losses from the drop in BRAEMAR HOTELS's long position.| Brown Forman vs. Diageo plc | Brown Forman vs. Pernod Ricard SA | Brown Forman vs. Rmy Cointreau SA | Brown Forman vs. BECLE SAB DE |
| BRAEMAR HOTELS vs. The Hanover Insurance | BRAEMAR HOTELS vs. Universal Insurance Holdings | BRAEMAR HOTELS vs. HANOVER INSURANCE | BRAEMAR HOTELS vs. Reinsurance Group of |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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