Correlation Between First and Beeks Trading
Can any of the company-specific risk be diversified away by investing in both First and Beeks Trading 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 First and Beeks Trading into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Class Metals and Beeks Trading, you can compare the effects of market volatilities on First and Beeks Trading 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 First with a short position of Beeks Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of First and Beeks Trading.
Diversification Opportunities for First and Beeks Trading
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Beeks is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Class Metals and Beeks Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beeks Trading and First 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 First Class Metals are associated (or correlated) with Beeks Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beeks Trading has no effect on the direction of First i.e., First and Beeks Trading go up and down completely randomly.
Pair Corralation between First and Beeks Trading
Assuming the 90 days trading horizon First Class Metals is expected to under-perform the Beeks Trading. In addition to that, First is 1.66 times more volatile than Beeks Trading. It trades about -0.06 of its total potential returns per unit of risk. Beeks Trading is currently generating about 0.05 per unit of volatility. If you would invest 27,000 in Beeks Trading on November 7, 2024 and sell it today you would earn a total of 1,600 from holding Beeks Trading or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Class Metals vs. Beeks Trading
Performance |
| Timeline |
| First Class Metals |
| Beeks Trading |
First and Beeks Trading Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First and Beeks Trading
The main advantage of trading using opposite First and Beeks Trading positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First position performs unexpectedly, Beeks Trading 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 Beeks Trading will offset losses from the drop in Beeks Trading's long position.The idea behind First Class Metals and Beeks Trading 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.| Beeks Trading vs. Travel Leisure Co | Beeks Trading vs. JD Sports Fashion | Beeks Trading vs. British American Tobacco | Beeks Trading vs. Gamma 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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