Correlation Between BB Biotech and Vanguard USD
Can any of the company-specific risk be diversified away by investing in both BB Biotech and Vanguard USD 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 BB Biotech and Vanguard USD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BB Biotech AG and Vanguard USD Treasury, you can compare the effects of market volatilities on BB Biotech and Vanguard USD 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 BB Biotech with a short position of Vanguard USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Biotech and Vanguard USD.
Diversification Opportunities for BB Biotech and Vanguard USD
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BION and Vanguard is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and Vanguard USD Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard USD Treasury and BB Biotech 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 BB Biotech AG are associated (or correlated) with Vanguard USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard USD Treasury has no effect on the direction of BB Biotech i.e., BB Biotech and Vanguard USD go up and down completely randomly.
Pair Corralation between BB Biotech and Vanguard USD
Assuming the 90 days trading horizon BB Biotech AG is expected to under-perform the Vanguard USD. In addition to that, BB Biotech is 4.53 times more volatile than Vanguard USD Treasury. It trades about -0.2 of its total potential returns per unit of risk. Vanguard USD Treasury is currently generating about 0.26 per unit of volatility. If you would invest 2,264 in Vanguard USD Treasury on September 13, 2024 and sell it today you would earn a total of 33.00 from holding Vanguard USD Treasury or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BB Biotech AG vs. Vanguard USD Treasury
Performance |
| Timeline |
| BB Biotech AG |
| Vanguard USD Treasury |
BB Biotech and Vanguard USD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BB Biotech and Vanguard USD
The main advantage of trading using opposite BB Biotech and Vanguard USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Biotech position performs unexpectedly, Vanguard USD 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 Vanguard USD will offset losses from the drop in Vanguard USD's long position.| BB Biotech vs. Swiss Life Holding | BB Biotech vs. Swiss Re AG | BB Biotech vs. Helvetia Holding AG | BB Biotech vs. Partners Group Holding |
| Vanguard USD vs. Baloise Holding AG | Vanguard USD vs. 21Shares Polkadot ETP | Vanguard USD vs. UBS ETF MSCI | Vanguard USD vs. BB Biotech AG |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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