Correlation Between New Generation and Bellatora
Can any of the company-specific risk be diversified away by investing in both New Generation and Bellatora 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 New Generation and Bellatora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Generation Consumer and Bellatora, you can compare the effects of market volatilities on New Generation and Bellatora 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 New Generation with a short position of Bellatora. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Generation and Bellatora.
Diversification Opportunities for New Generation and Bellatora
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between New and Bellatora is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding New Generation Consumer and Bellatora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellatora and New Generation 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 New Generation Consumer are associated (or correlated) with Bellatora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellatora has no effect on the direction of New Generation i.e., New Generation and Bellatora go up and down completely randomly.
Pair Corralation between New Generation and Bellatora
Given the investment horizon of 90 days New Generation is expected to generate 21.14 times less return on investment than Bellatora. But when comparing it to its historical volatility, New Generation Consumer is 5.38 times less risky than Bellatora. It trades about 0.03 of its potential returns per unit of risk. Bellatora is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.11 in Bellatora on August 29, 2024 and sell it today you would earn a total of 84.89 from holding Bellatora or generate 77172.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Generation Consumer vs. Bellatora
Performance |
| Timeline |
| New Generation Consumer |
| Bellatora |
New Generation and Bellatora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Generation and Bellatora
The main advantage of trading using opposite New Generation and Bellatora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Generation position performs unexpectedly, Bellatora 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 Bellatora will offset losses from the drop in Bellatora's long position.| New Generation vs. Green Planet Bio | New Generation vs. Azure Holding Group | New Generation vs. Four Leaf Acquisition | New Generation vs. Opus Magnum Ameris |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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