Correlation Between BKI Investment and Arc Funds
Can any of the company-specific risk be diversified away by investing in both BKI Investment and Arc Funds 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 Arc Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BKI Investment and Arc Funds, you can compare the effects of market volatilities on BKI Investment and Arc Funds 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 Arc Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKI Investment and Arc Funds.
Diversification Opportunities for BKI Investment and Arc Funds
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BKI and Arc is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BKI Investment and Arc Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arc Funds 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 Arc Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arc Funds has no effect on the direction of BKI Investment i.e., BKI Investment and Arc Funds go up and down completely randomly.
Pair Corralation between BKI Investment and Arc Funds
Assuming the 90 days trading horizon BKI Investment is expected to generate 14.13 times less return on investment than Arc Funds. But when comparing it to its historical volatility, BKI Investment is 3.66 times less risky than Arc Funds. It trades about 0.11 of its potential returns per unit of risk. Arc Funds is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 8.70 in Arc Funds on October 25, 2024 and sell it today you would earn a total of 2.30 from holding Arc Funds or generate 26.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
BKI Investment vs. Arc Funds
Performance |
| Timeline |
| BKI Investment |
| Arc Funds |
BKI Investment and Arc Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BKI Investment and Arc Funds
The main advantage of trading using opposite BKI Investment and Arc Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKI Investment position performs unexpectedly, Arc Funds 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 Arc Funds will offset losses from the drop in Arc Funds' long position.| BKI Investment vs. Mayfield Childcare | BKI Investment vs. Ambertech | BKI Investment vs. Maggie Beer Holdings | BKI Investment vs. Retail Food Group |
| Arc Funds vs. PVW Resources | Arc Funds vs. Woolworths | Arc Funds vs. Wesfarmers | Arc Funds vs. Coles Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |