Correlation Between Caledonia Investments and Bankers Investment
Can any of the company-specific risk be diversified away by investing in both Caledonia Investments and Bankers Investment 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 Caledonia Investments and Bankers Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Investments and Bankers Investment Trust, you can compare the effects of market volatilities on Caledonia Investments and Bankers Investment 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 Caledonia Investments with a short position of Bankers Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Investments and Bankers Investment.
Diversification Opportunities for Caledonia Investments and Bankers Investment
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caledonia and Bankers is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Investments and Bankers Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankers Investment Trust and Caledonia Investments 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 Caledonia Investments are associated (or correlated) with Bankers Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankers Investment Trust has no effect on the direction of Caledonia Investments i.e., Caledonia Investments and Bankers Investment go up and down completely randomly.
Pair Corralation between Caledonia Investments and Bankers Investment
Assuming the 90 days trading horizon Caledonia Investments is expected to generate 1.13 times less return on investment than Bankers Investment. But when comparing it to its historical volatility, Caledonia Investments is 1.23 times less risky than Bankers Investment. It trades about 0.29 of its potential returns per unit of risk. Bankers Investment Trust is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 11,676 in Bankers Investment Trust on November 6, 2024 and sell it today you would earn a total of 704.00 from holding Bankers Investment Trust or generate 6.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Investments vs. Bankers Investment Trust
Performance |
| Timeline |
| Caledonia Investments |
| Bankers Investment Trust |
Caledonia Investments and Bankers Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Investments and Bankers Investment
The main advantage of trading using opposite Caledonia Investments and Bankers Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Investments position performs unexpectedly, Bankers Investment 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 Bankers Investment will offset losses from the drop in Bankers Investment's long position.| Caledonia Investments vs. Clean Power Hydrogen | Caledonia Investments vs. National Beverage Corp | Caledonia Investments vs. Morgan Advanced Materials | Caledonia Investments vs. Premier Foods PLC |
| Bankers Investment vs. Gamma Communications PLC | Bankers Investment vs. Zoom Video Communications | Bankers Investment vs. Litigation Capital Management | Bankers Investment vs. Aeorema Communications Plc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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