Correlation Between Graham Holdings and BRC
Can any of the company-specific risk be diversified away by investing in both Graham Holdings and BRC 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 Graham Holdings and BRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graham Holdings Co and BRC Inc, you can compare the effects of market volatilities on Graham Holdings and BRC 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 Graham Holdings with a short position of BRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graham Holdings and BRC.
Diversification Opportunities for Graham Holdings and BRC
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Graham and BRC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co and BRC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRC Inc and Graham Holdings 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 Graham Holdings Co are associated (or correlated) with BRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRC Inc has no effect on the direction of Graham Holdings i.e., Graham Holdings and BRC go up and down completely randomly.
Pair Corralation between Graham Holdings and BRC
Considering the 90-day investment horizon Graham Holdings Co is expected to generate 0.57 times more return on investment than BRC. However, Graham Holdings Co is 1.75 times less risky than BRC. It trades about 0.09 of its potential returns per unit of risk. BRC Inc is currently generating about -0.08 per unit of risk. If you would invest 88,711 in Graham Holdings Co on October 26, 2024 and sell it today you would earn a total of 2,018 from holding Graham Holdings Co or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graham Holdings Co vs. BRC Inc
Performance |
| Timeline |
| Graham Holdings |
| BRC Inc |
Graham Holdings and BRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graham Holdings and BRC
The main advantage of trading using opposite Graham Holdings and BRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graham Holdings position performs unexpectedly, BRC 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 BRC will offset losses from the drop in BRC's long position.| Graham Holdings vs. Cable One | Graham Holdings vs. Adtalem Global Education | Graham Holdings vs. Axalta Coating Systems | Graham Holdings vs. Madison Square Garden |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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