Correlation Between Bridgestone and SOGECLAIR
Can any of the company-specific risk be diversified away by investing in both Bridgestone and SOGECLAIR 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 Bridgestone and SOGECLAIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgestone and SOGECLAIR SA INH, you can compare the effects of market volatilities on Bridgestone and SOGECLAIR 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 Bridgestone with a short position of SOGECLAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgestone and SOGECLAIR.
Diversification Opportunities for Bridgestone and SOGECLAIR
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bridgestone and SOGECLAIR is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bridgestone and SOGECLAIR SA INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGECLAIR SA INH and Bridgestone 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 Bridgestone are associated (or correlated) with SOGECLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGECLAIR SA INH has no effect on the direction of Bridgestone i.e., Bridgestone and SOGECLAIR go up and down completely randomly.
Pair Corralation between Bridgestone and SOGECLAIR
Assuming the 90 days trading horizon Bridgestone is expected to generate 4.88 times less return on investment than SOGECLAIR. But when comparing it to its historical volatility, Bridgestone is 4.27 times less risky than SOGECLAIR. It trades about 0.1 of its potential returns per unit of risk. SOGECLAIR SA INH is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,740 in SOGECLAIR SA INH on October 24, 2024 and sell it today you would earn a total of 145.00 from holding SOGECLAIR SA INH or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgestone vs. SOGECLAIR SA INH
Performance |
| Timeline |
| Bridgestone |
| SOGECLAIR SA INH |
Bridgestone and SOGECLAIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgestone and SOGECLAIR
The main advantage of trading using opposite Bridgestone and SOGECLAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgestone position performs unexpectedly, SOGECLAIR 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 SOGECLAIR will offset losses from the drop in SOGECLAIR's long position.| Bridgestone vs. Hemisphere Energy Corp | Bridgestone vs. Casio Computer CoLtd | Bridgestone vs. Warner Music Group | Bridgestone vs. HEMISPHERE EGY |
| SOGECLAIR vs. Cars Inc | SOGECLAIR vs. AEGEAN AIRLINES | SOGECLAIR vs. Pembina Pipeline Corp | SOGECLAIR vs. FLOW TRADERS LTD |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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