Correlation Between BZAM and RIV Capital
Can any of the company-specific risk be diversified away by investing in both BZAM and RIV Capital 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 BZAM and RIV Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BZAM and RIV Capital, you can compare the effects of market volatilities on BZAM and RIV Capital 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 BZAM with a short position of RIV Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of BZAM and RIV Capital.
Diversification Opportunities for BZAM and RIV Capital
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BZAM and RIV is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding BZAM and RIV Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RIV Capital and BZAM 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 BZAM are associated (or correlated) with RIV Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RIV Capital has no effect on the direction of BZAM i.e., BZAM and RIV Capital go up and down completely randomly.
Pair Corralation between BZAM and RIV Capital
Assuming the 90 days horizon BZAM is expected to generate 10.88 times more return on investment than RIV Capital. However, BZAM is 10.88 times more volatile than RIV Capital. It trades about 0.08 of its potential returns per unit of risk. RIV Capital is currently generating about 0.04 per unit of risk. If you would invest 24.00 in BZAM on August 26, 2024 and sell it today you would lose (23.99) from holding BZAM or give up 99.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
BZAM vs. RIV Capital
Performance |
| Timeline |
| BZAM |
| RIV Capital |
BZAM and RIV Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BZAM and RIV Capital
The main advantage of trading using opposite BZAM and RIV Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BZAM position performs unexpectedly, RIV Capital 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 RIV Capital will offset losses from the drop in RIV Capital's long position.| BZAM vs. Udemy Inc | BZAM vs. Bright Scholar Education | BZAM vs. Evolution Mining | BZAM vs. WEBTOON Entertainment Common |
| RIV Capital vs. Green Cures Botanical | RIV Capital vs. Galexxy Holdings | RIV Capital vs. Indoor Harvest Corp | RIV Capital vs. Speakeasy Cannabis Club |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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