Correlation Between Better World and Bridgetown Holdings
Can any of the company-specific risk be diversified away by investing in both Better World and Bridgetown Holdings 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 Better World and Bridgetown Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Better World Acquisition and Bridgetown Holdings, you can compare the effects of market volatilities on Better World and Bridgetown Holdings 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 Better World with a short position of Bridgetown Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Better World and Bridgetown Holdings.
Diversification Opportunities for Better World and Bridgetown Holdings
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Better and Bridgetown is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Better World Acquisition and Bridgetown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgetown Holdings and Better World 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 Better World Acquisition are associated (or correlated) with Bridgetown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgetown Holdings has no effect on the direction of Better World i.e., Better World and Bridgetown Holdings go up and down completely randomly.
Pair Corralation between Better World and Bridgetown Holdings
If you would invest 21.00 in Bridgetown Holdings on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Bridgetown Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Better World Acquisition vs. Bridgetown Holdings
Performance |
| Timeline |
| Better World Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Bridgetown Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Better World and Bridgetown Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Better World and Bridgetown Holdings
The main advantage of trading using opposite Better World and Bridgetown Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Better World position performs unexpectedly, Bridgetown Holdings 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 Bridgetown Holdings will offset losses from the drop in Bridgetown Holdings' long position.The idea behind Better World Acquisition and Bridgetown Holdings 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.| Bridgetown Holdings vs. National Beverage Corp | Bridgetown Holdings vs. Flex | Bridgetown Holdings vs. Compania Cervecerias Unidas | Bridgetown Holdings vs. QuickLogic |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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