Correlation Between Birks and Appian Corp
Can any of the company-specific risk be diversified away by investing in both Birks and Appian Corp 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 Birks and Appian Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birks Group and Appian Corp, you can compare the effects of market volatilities on Birks and Appian Corp 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 Birks with a short position of Appian Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birks and Appian Corp.
Diversification Opportunities for Birks and Appian Corp
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Birks and Appian is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Birks Group and Appian Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appian Corp and Birks 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 Birks Group are associated (or correlated) with Appian Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appian Corp has no effect on the direction of Birks i.e., Birks and Appian Corp go up and down completely randomly.
Pair Corralation between Birks and Appian Corp
Considering the 90-day investment horizon Birks Group is expected to under-perform the Appian Corp. In addition to that, Birks is 1.09 times more volatile than Appian Corp. It trades about -0.07 of its total potential returns per unit of risk. Appian Corp is currently generating about 0.02 per unit of volatility. If you would invest 3,661 in Appian Corp on September 4, 2024 and sell it today you would earn a total of 200.00 from holding Appian Corp or generate 5.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Birks Group vs. Appian Corp
Performance |
| Timeline |
| Birks Group |
| Appian Corp |
Birks and Appian Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birks and Appian Corp
The main advantage of trading using opposite Birks and Appian Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birks position performs unexpectedly, Appian Corp 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 Appian Corp will offset losses from the drop in Appian Corp's long position.The idea behind Birks Group and Appian Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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