Correlation Between Big Time and CMT
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By analyzing existing cross correlation between Big Time and CMT, you can compare the effects of market volatilities on Big Time and CMT 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 Time with a short position of CMT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Time and CMT.
Diversification Opportunities for Big Time and CMT
Very good diversification
The 3 months correlation between Big and CMT is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Big Time and CMT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMT and Big Time 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 Time are associated (or correlated) with CMT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMT has no effect on the direction of Big Time i.e., Big Time and CMT go up and down completely randomly.
Pair Corralation between Big Time and CMT
Assuming the 90 days trading horizon Big Time is expected to under-perform the CMT. In addition to that, Big Time is 2.9 times more volatile than CMT. It trades about -0.29 of its total potential returns per unit of risk. CMT is currently generating about 0.0 per unit of volatility. If you would invest 0.77 in CMT on November 9, 2024 and sell it today you would lose (0.01) from holding CMT or give up 1.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Time vs. CMT
Performance |
| Timeline |
| Big Time |
| CMT |
Big Time and CMT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Time and CMT
The main advantage of trading using opposite Big Time and CMT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Time position performs unexpectedly, CMT 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 CMT will offset losses from the drop in CMT's long position.The idea behind Big Time and CMT 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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