Correlation Between Century Insurance and Big Bird
Can any of the company-specific risk be diversified away by investing in both Century Insurance and Big Bird 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 Century Insurance and Big Bird into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Insurance and Big Bird Foods, you can compare the effects of market volatilities on Century Insurance and Big Bird 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 Century Insurance with a short position of Big Bird. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Insurance and Big Bird.
Diversification Opportunities for Century Insurance and Big Bird
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Century and Big is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Century Insurance and Big Bird Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Bird Foods and Century Insurance 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 Century Insurance are associated (or correlated) with Big Bird. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Bird Foods has no effect on the direction of Century Insurance i.e., Century Insurance and Big Bird go up and down completely randomly.
Pair Corralation between Century Insurance and Big Bird
Assuming the 90 days trading horizon Century Insurance is expected to generate 0.6 times more return on investment than Big Bird. However, Century Insurance is 1.66 times less risky than Big Bird. It trades about 0.2 of its potential returns per unit of risk. Big Bird Foods is currently generating about -0.11 per unit of risk. If you would invest 2,671 in Century Insurance on November 2, 2024 and sell it today you would earn a total of 1,249 from holding Century Insurance or generate 46.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Century Insurance vs. Big Bird Foods
Performance |
| Timeline |
| Century Insurance |
| Big Bird Foods |
Century Insurance and Big Bird Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Insurance and Big Bird
The main advantage of trading using opposite Century Insurance and Big Bird positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Insurance position performs unexpectedly, Big Bird 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 Big Bird will offset losses from the drop in Big Bird's long position.| Century Insurance vs. Mughal Iron Steel | Century Insurance vs. Allied Bank | Century Insurance vs. NetSol Technologies | Century Insurance vs. Beco Steel |
| Big Bird vs. Jubilee Life Insurance | Big Bird vs. Pakistan Reinsurance | Big Bird vs. Atlas Insurance | Big Bird vs. Century Insurance |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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