Correlation Between BOS Better and Sound Point
Can any of the company-specific risk be diversified away by investing in both BOS Better and Sound Point 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 BOS Better and Sound Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOS Better Online and Sound Point Meridian, you can compare the effects of market volatilities on BOS Better and Sound Point 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 BOS Better with a short position of Sound Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOS Better and Sound Point.
Diversification Opportunities for BOS Better and Sound Point
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BOS and Sound is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BOS Better Online and Sound Point Meridian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Point Meridian and BOS Better 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 BOS Better Online are associated (or correlated) with Sound Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Point Meridian has no effect on the direction of BOS Better i.e., BOS Better and Sound Point go up and down completely randomly.
Pair Corralation between BOS Better and Sound Point
Given the investment horizon of 90 days BOS Better Online is expected to generate 1.39 times more return on investment than Sound Point. However, BOS Better is 1.39 times more volatile than Sound Point Meridian. It trades about 0.06 of its potential returns per unit of risk. Sound Point Meridian is currently generating about 0.02 per unit of risk. If you would invest 267.00 in BOS Better Online on September 2, 2024 and sell it today you would earn a total of 72.00 from holding BOS Better Online or generate 26.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 47.98% |
| Values | Daily Returns |
BOS Better Online vs. Sound Point Meridian
Performance |
| Timeline |
| BOS Better Online |
| Sound Point Meridian |
BOS Better and Sound Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOS Better and Sound Point
The main advantage of trading using opposite BOS Better and Sound Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOS Better position performs unexpectedly, Sound Point 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 Sound Point will offset losses from the drop in Sound Point's long position.| BOS Better vs. Mynaric AG ADR | BOS Better vs. Knowles Cor | BOS Better vs. Comtech Telecommunications Corp | BOS Better vs. Ituran Location and |
| Sound Point vs. Atlanticus Holdings | Sound Point vs. Great Elm Capital | Sound Point vs. Aquagold International | Sound Point vs. Thrivent High Yield |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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