Correlation Between EAST SIDE and BP Plc
Can any of the company-specific risk be diversified away by investing in both EAST SIDE and BP Plc 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 EAST SIDE and BP Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAST SIDE GAMES and BP plc, you can compare the effects of market volatilities on EAST SIDE and BP Plc 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 EAST SIDE with a short position of BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAST SIDE and BP Plc.
Diversification Opportunities for EAST SIDE and BP Plc
Very weak diversification
The 3 months correlation between EAST and BSU is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding EAST SIDE GAMES and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc and EAST SIDE 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 EAST SIDE GAMES are associated (or correlated) with BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of EAST SIDE i.e., EAST SIDE and BP Plc go up and down completely randomly.
Pair Corralation between EAST SIDE and BP Plc
Assuming the 90 days horizon EAST SIDE GAMES is expected to under-perform the BP Plc. In addition to that, EAST SIDE is 1.9 times more volatile than BP plc. It trades about -0.03 of its total potential returns per unit of risk. BP plc is currently generating about -0.04 per unit of volatility. If you would invest 2,988 in BP plc on August 28, 2024 and sell it today you would lose (168.00) from holding BP plc or give up 5.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
EAST SIDE GAMES vs. BP plc
Performance |
| Timeline |
| EAST SIDE GAMES |
| BP plc |
EAST SIDE and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAST SIDE and BP Plc
The main advantage of trading using opposite EAST SIDE and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAST SIDE position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.The idea behind EAST SIDE GAMES and BP plc 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.| BP Plc vs. HOCHSCHILD MINING | BP Plc vs. GALENA MINING LTD | BP Plc vs. TROPHY GAMES DEV | BP Plc vs. EAST SIDE GAMES |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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