Correlation Between BKI Investment and Alternative Investment
Can any of the company-specific risk be diversified away by investing in both BKI Investment and Alternative Investment 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 BKI Investment and Alternative Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BKI Investment and Alternative Investment Trust, you can compare the effects of market volatilities on BKI Investment and Alternative Investment 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 BKI Investment with a short position of Alternative Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKI Investment and Alternative Investment.
Diversification Opportunities for BKI Investment and Alternative Investment
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BKI and Alternative is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BKI Investment and Alternative Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Investment and BKI Investment 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 BKI Investment are associated (or correlated) with Alternative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Investment has no effect on the direction of BKI Investment i.e., BKI Investment and Alternative Investment go up and down completely randomly.
Pair Corralation between BKI Investment and Alternative Investment
Assuming the 90 days trading horizon BKI Investment is expected to generate 2.81 times less return on investment than Alternative Investment. But when comparing it to its historical volatility, BKI Investment is 1.71 times less risky than Alternative Investment. It trades about 0.06 of its potential returns per unit of risk. Alternative Investment Trust is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 140.00 in Alternative Investment Trust on November 3, 2024 and sell it today you would earn a total of 7.00 from holding Alternative Investment Trust or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BKI Investment vs. Alternative Investment Trust
Performance |
| Timeline |
| BKI Investment |
| Alternative Investment |
BKI Investment and Alternative Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BKI Investment and Alternative Investment
The main advantage of trading using opposite BKI Investment and Alternative Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKI Investment position performs unexpectedly, Alternative Investment 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 Alternative Investment will offset losses from the drop in Alternative Investment's long position.| BKI Investment vs. Autosports Group | BKI Investment vs. Ras Technology Holdings | BKI Investment vs. Nufarm Finance NZ | BKI Investment vs. Beston Global Food |
| Alternative Investment vs. Australian Unity Office | Alternative Investment vs. Dug Technology | Alternative Investment vs. Macquarie Technology Group | Alternative Investment vs. Technology One |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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