Correlation Between Bruker and Si Bone
Can any of the company-specific risk be diversified away by investing in both Bruker and Si Bone 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 Bruker and Si Bone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bruker and Si Bone, you can compare the effects of market volatilities on Bruker and Si Bone 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 Bruker with a short position of Si Bone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bruker and Si Bone.
Diversification Opportunities for Bruker and Si Bone
Very weak diversification
The 3 months correlation between Bruker and SIBN is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bruker and Si Bone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Si Bone and Bruker 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 Bruker are associated (or correlated) with Si Bone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Si Bone has no effect on the direction of Bruker i.e., Bruker and Si Bone go up and down completely randomly.
Pair Corralation between Bruker and Si Bone
Given the investment horizon of 90 days Bruker is expected to generate 28.95 times less return on investment than Si Bone. But when comparing it to its historical volatility, Bruker is 1.42 times less risky than Si Bone. It trades about 0.0 of its potential returns per unit of risk. Si Bone is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,213 in Si Bone on August 28, 2024 and sell it today you would earn a total of 52.00 from holding Si Bone or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bruker vs. Si Bone
Performance |
| Timeline |
| Bruker |
| Si Bone |
Bruker and Si Bone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bruker and Si Bone
The main advantage of trading using opposite Bruker and Si Bone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bruker position performs unexpectedly, Si Bone 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 Si Bone will offset losses from the drop in Si Bone's long position.The idea behind Bruker and Si Bone 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.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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