Correlation Between BT Brands and Smart Share
Can any of the company-specific risk be diversified away by investing in both BT Brands and Smart Share 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 Smart Share into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BT Brands Warrant and Smart Share Global, you can compare the effects of market volatilities on BT Brands and Smart Share 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 Smart Share. Check out your portfolio center. Please also check ongoing floating volatility patterns of BT Brands and Smart Share.
Diversification Opportunities for BT Brands and Smart Share
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BTBDW and Smart is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding BT Brands Warrant and Smart Share Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Share Global 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 Warrant are associated (or correlated) with Smart Share. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Share Global has no effect on the direction of BT Brands i.e., BT Brands and Smart Share go up and down completely randomly.
Pair Corralation between BT Brands and Smart Share
Assuming the 90 days horizon BT Brands Warrant is expected to generate 5.56 times more return on investment than Smart Share. However, BT Brands is 5.56 times more volatile than Smart Share Global. It trades about 0.45 of its potential returns per unit of risk. Smart Share Global is currently generating about 0.04 per unit of risk. If you would invest 6.23 in BT Brands Warrant on August 24, 2024 and sell it today you would earn a total of 3.21 from holding BT Brands Warrant or generate 51.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 36.36% |
| Values | Daily Returns |
BT Brands Warrant vs. Smart Share Global
Performance |
| Timeline |
| BT Brands Warrant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Smart Share Global |
BT Brands and Smart Share Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BT Brands and Smart Share
The main advantage of trading using opposite BT Brands and Smart Share positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BT Brands position performs unexpectedly, Smart Share 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 Smart Share will offset losses from the drop in Smart Share's long position.| BT Brands vs. Bloomin Brands | BT Brands vs. BJs Restaurants | BT Brands vs. Darden Restaurants | BT Brands vs. Wingstop |
| Smart Share vs. Frontdoor | Smart Share vs. Bright Horizons Family | Smart Share vs. Mister Car Wash | Smart Share vs. Service International |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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