Correlation Between BRC and Graham Holdings
Can any of the company-specific risk be diversified away by investing in both BRC and Graham Holdings 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 BRC and Graham Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRC Inc and Graham Holdings Co, you can compare the effects of market volatilities on BRC and Graham Holdings 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 BRC with a short position of Graham Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRC and Graham Holdings.
Diversification Opportunities for BRC and Graham Holdings
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BRC and Graham is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding BRC Inc and Graham Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings and BRC 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 BRC Inc are associated (or correlated) with Graham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings has no effect on the direction of BRC i.e., BRC and Graham Holdings go up and down completely randomly.
Pair Corralation between BRC and Graham Holdings
Given the investment horizon of 90 days BRC Inc is expected to generate 1.25 times more return on investment than Graham Holdings. However, BRC is 1.25 times more volatile than Graham Holdings Co. It trades about 0.15 of its potential returns per unit of risk. Graham Holdings Co is currently generating about -0.2 per unit of risk. If you would invest 297.00 in BRC Inc on October 11, 2024 and sell it today you would earn a total of 20.00 from holding BRC Inc or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
BRC Inc vs. Graham Holdings Co
Performance |
| Timeline |
| BRC Inc |
| Graham Holdings |
BRC and Graham Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRC and Graham Holdings
The main advantage of trading using opposite BRC and Graham Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRC position performs unexpectedly, Graham Holdings 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 Graham Holdings will offset losses from the drop in Graham Holdings' long position.The idea behind BRC Inc and Graham Holdings Co 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.| Graham Holdings vs. Cable One | Graham Holdings vs. Adtalem Global Education | Graham Holdings vs. Axalta Coating Systems | Graham Holdings vs. Madison Square Garden |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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