Correlation Between BB Biotech and Invesco Technology
Can any of the company-specific risk be diversified away by investing in both BB Biotech and Invesco Technology 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 Invesco Technology 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 Invesco Technology SP, you can compare the effects of market volatilities on BB Biotech and Invesco Technology 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 Invesco Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Biotech and Invesco Technology.
Diversification Opportunities for BB Biotech and Invesco Technology
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BION and Invesco is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and Invesco Technology SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Technology 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 Invesco Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Technology has no effect on the direction of BB Biotech i.e., BB Biotech and Invesco Technology go up and down completely randomly.
Pair Corralation between BB Biotech and Invesco Technology
Assuming the 90 days trading horizon BB Biotech AG is expected to under-perform the Invesco Technology. But the stock apears to be less risky and, when comparing its historical volatility, BB Biotech AG is 1.01 times less risky than Invesco Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Invesco Technology SP is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 30,590 in Invesco Technology SP on September 14, 2024 and sell it today you would earn a total of 39,360 from holding Invesco Technology SP or generate 128.67% 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. Invesco Technology SP
Performance |
| Timeline |
| BB Biotech AG |
| Invesco Technology |
BB Biotech and Invesco Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BB Biotech and Invesco Technology
The main advantage of trading using opposite BB Biotech and Invesco Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Biotech position performs unexpectedly, Invesco Technology 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 Invesco Technology will offset losses from the drop in Invesco Technology'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 |
| Invesco Technology vs. Baloise Holding AG | Invesco Technology vs. 21Shares Polkadot ETP | Invesco Technology vs. UBS ETF MSCI | Invesco Technology 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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