Correlation Between BMTC and Tree Island
Can any of the company-specific risk be diversified away by investing in both BMTC and Tree Island 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 BMTC and Tree Island into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMTC Group and Tree Island Steel, you can compare the effects of market volatilities on BMTC and Tree Island 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 BMTC with a short position of Tree Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMTC and Tree Island.
Diversification Opportunities for BMTC and Tree Island
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between BMTC and Tree is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding BMTC Group and Tree Island Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tree Island Steel and BMTC 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 BMTC Group are associated (or correlated) with Tree Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tree Island Steel has no effect on the direction of BMTC i.e., BMTC and Tree Island go up and down completely randomly.
Pair Corralation between BMTC and Tree Island
Assuming the 90 days trading horizon BMTC Group is expected to under-perform the Tree Island. But the stock apears to be less risky and, when comparing its historical volatility, BMTC Group is 1.97 times less risky than Tree Island. The stock trades about -0.15 of its potential returns per unit of risk. The Tree Island Steel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 294.00 in Tree Island Steel on September 12, 2024 and sell it today you would earn a total of 6.00 from holding Tree Island Steel or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMTC Group vs. Tree Island Steel
Performance |
| Timeline |
| BMTC Group |
| Tree Island Steel |
BMTC and Tree Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMTC and Tree Island
The main advantage of trading using opposite BMTC and Tree Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMTC position performs unexpectedly, Tree Island 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 Tree Island will offset losses from the drop in Tree Island's long position.| BMTC vs. Leons Furniture Limited | BMTC vs. Lassonde Industries | BMTC vs. TWC Enterprises | BMTC vs. Supremex |
| Tree Island vs. Supremex | Tree Island vs. Conifex Timber | Tree Island vs. Exco Technologies Limited | Tree Island vs. Taiga Building Products |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |