Correlation Between Freedom Bank and Berkeley
Can any of the company-specific risk be diversified away by investing in both Freedom Bank and Berkeley 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 Freedom Bank and Berkeley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and The Berkeley Group, you can compare the effects of market volatilities on Freedom Bank and Berkeley 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 Freedom Bank with a short position of Berkeley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Berkeley.
Diversification Opportunities for Freedom Bank and Berkeley
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Freedom and Berkeley is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and The Berkeley Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkeley Group and Freedom Bank 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 Freedom Bank of are associated (or correlated) with Berkeley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkeley Group has no effect on the direction of Freedom Bank i.e., Freedom Bank and Berkeley go up and down completely randomly.
Pair Corralation between Freedom Bank and Berkeley
If you would invest 1,074 in Freedom Bank of on September 12, 2024 and sell it today you would earn a total of 27.00 from holding Freedom Bank of or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Freedom Bank of vs. The Berkeley Group
Performance |
| Timeline |
| Freedom Bank |
| Berkeley Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Freedom Bank and Berkeley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and Berkeley
The main advantage of trading using opposite Freedom Bank and Berkeley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank position performs unexpectedly, Berkeley 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 Berkeley will offset losses from the drop in Berkeley's long position.| Freedom Bank vs. HUMANA INC | Freedom Bank vs. Barloworld Ltd ADR | Freedom Bank vs. Morningstar Unconstrained Allocation | Freedom Bank vs. Thrivent High Yield |
| Berkeley vs. Summit Materials | Berkeley vs. Bright Scholar Education | Berkeley vs. Ihuman Inc | Berkeley vs. Getty Copper |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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