Correlation Between BSQUARE and TSR
Can any of the company-specific risk be diversified away by investing in both BSQUARE and TSR 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 BSQUARE and TSR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BSQUARE and TSR Inc, you can compare the effects of market volatilities on BSQUARE and TSR 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 BSQUARE with a short position of TSR. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSQUARE and TSR.
Diversification Opportunities for BSQUARE and TSR
Poor diversification
The 3 months correlation between BSQUARE and TSR is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BSQUARE and TSR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TSR Inc and BSQUARE 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 BSQUARE are associated (or correlated) with TSR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TSR Inc has no effect on the direction of BSQUARE i.e., BSQUARE and TSR go up and down completely randomly.
Pair Corralation between BSQUARE and TSR
If you would invest 730.00 in TSR Inc on September 12, 2024 and sell it today you would earn a total of 608.00 from holding TSR Inc or generate 83.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.47% |
| Values | Daily Returns |
BSQUARE vs. TSR Inc
Performance |
| Timeline |
| BSQUARE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| TSR Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
BSQUARE and TSR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BSQUARE and TSR
The main advantage of trading using opposite BSQUARE and TSR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BSQUARE position performs unexpectedly, TSR 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 TSR will offset losses from the drop in TSR's long position.The idea behind BSQUARE and TSR Inc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |