Correlation Between BP Plc and Superior Plus
Can any of the company-specific risk be diversified away by investing in both BP Plc and Superior Plus 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 BP Plc and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BP plc and Superior Plus Corp, you can compare the effects of market volatilities on BP Plc and Superior Plus 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 BP Plc with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Plc and Superior Plus.
Diversification Opportunities for BP Plc and Superior Plus
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BSU and Superior is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BP plc and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and BP Plc 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 BP plc are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of BP Plc i.e., BP Plc and Superior Plus go up and down completely randomly.
Pair Corralation between BP Plc and Superior Plus
Assuming the 90 days trading horizon BP plc is expected to generate 0.62 times more return on investment than Superior Plus. However, BP plc is 1.61 times less risky than Superior Plus. It trades about -0.03 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.04 per unit of risk. If you would invest 3,166 in BP plc on August 26, 2024 and sell it today you would lose (346.00) from holding BP plc or give up 10.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BP plc vs. Superior Plus Corp
Performance |
| Timeline |
| BP plc |
| Superior Plus Corp |
BP Plc and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BP Plc and Superior Plus
The main advantage of trading using opposite BP Plc and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Plc position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| BP Plc vs. Superior Plus Corp | BP Plc vs. Origin Agritech | BP Plc vs. Identiv | BP Plc vs. INTUITIVE SURGICAL |
| Superior Plus vs. LION ONE METALS | Superior Plus vs. Zijin Mining Group | Superior Plus vs. SBI Insurance Group | Superior Plus vs. HANOVER INSURANCE |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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