Correlation Between Bt Brands and Universal Media
Can any of the company-specific risk be diversified away by investing in both Bt Brands and Universal Media 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 Bt Brands and Universal Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bt Brands and Universal Media Group, you can compare the effects of market volatilities on Bt Brands and Universal Media 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 Bt Brands with a short position of Universal Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bt Brands and Universal Media.
Diversification Opportunities for Bt Brands and Universal Media
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between BTBD and Universal is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and Universal Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Media Group and Bt Brands 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 Bt Brands are associated (or correlated) with Universal Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Media Group has no effect on the direction of Bt Brands i.e., Bt Brands and Universal Media go up and down completely randomly.
Pair Corralation between Bt Brands and Universal Media
Given the investment horizon of 90 days Bt Brands is expected to under-perform the Universal Media. But the stock apears to be less risky and, when comparing its historical volatility, Bt Brands is 5.97 times less risky than Universal Media. The stock trades about -0.02 of its potential returns per unit of risk. The Universal Media Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3.30 in Universal Media Group on August 30, 2024 and sell it today you would earn a total of 0.39 from holding Universal Media Group or generate 11.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bt Brands vs. Universal Media Group
Performance |
| Timeline |
| Bt Brands |
| Universal Media Group |
Bt Brands and Universal Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bt Brands and Universal Media
The main advantage of trading using opposite Bt Brands and Universal Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bt Brands position performs unexpectedly, Universal Media 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 Universal Media will offset losses from the drop in Universal Media's long position.The idea behind Bt Brands and Universal Media Group 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.| Universal Media vs. Kura Sushi USA | Universal Media vs. Kinsale Capital Group | Universal Media vs. GoHealth | Universal Media vs. RCI Hospitality Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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