Correlation Between BTB Real and Ecovyst
Can any of the company-specific risk be diversified away by investing in both BTB Real and Ecovyst 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 BTB Real and Ecovyst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTB Real Estate and Ecovyst, you can compare the effects of market volatilities on BTB Real and Ecovyst 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 BTB Real with a short position of Ecovyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTB Real and Ecovyst.
Diversification Opportunities for BTB Real and Ecovyst
Very good diversification
The 3 months correlation between BTB and Ecovyst is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding BTB Real Estate and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst and BTB Real 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 BTB Real Estate are associated (or correlated) with Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of BTB Real i.e., BTB Real and Ecovyst go up and down completely randomly.
Pair Corralation between BTB Real and Ecovyst
Assuming the 90 days horizon BTB Real is expected to generate 3.68 times less return on investment than Ecovyst. But when comparing it to its historical volatility, BTB Real Estate is 3.39 times less risky than Ecovyst. It trades about 0.11 of its potential returns per unit of risk. Ecovyst is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 763.00 in Ecovyst on September 3, 2024 and sell it today you would earn a total of 32.00 from holding Ecovyst or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BTB Real Estate vs. Ecovyst
Performance |
| Timeline |
| BTB Real Estate |
| Ecovyst |
BTB Real and Ecovyst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTB Real and Ecovyst
The main advantage of trading using opposite BTB Real and Ecovyst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTB Real position performs unexpectedly, Ecovyst 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 Ecovyst will offset losses from the drop in Ecovyst's long position.| BTB Real vs. City Office | BTB Real vs. Vornado Realty Trust | BTB Real vs. Cousins Properties Incorporated | BTB Real vs. Highwoods Properties |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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