Correlation Between Pekin Life and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Pekin Life and BBB Foods 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 Pekin Life and BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pekin Life Insurance and BBB Foods, you can compare the effects of market volatilities on Pekin Life and BBB Foods 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 Pekin Life with a short position of BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pekin Life and BBB Foods.
Diversification Opportunities for Pekin Life and BBB Foods
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pekin and BBB is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Pekin Life Insurance and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods and Pekin Life 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 Pekin Life Insurance are associated (or correlated) with BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Pekin Life i.e., Pekin Life and BBB Foods go up and down completely randomly.
Pair Corralation between Pekin Life and BBB Foods
Given the investment horizon of 90 days Pekin Life is expected to generate 9.78 times less return on investment than BBB Foods. But when comparing it to its historical volatility, Pekin Life Insurance is 15.28 times less risky than BBB Foods. It trades about 0.1 of its potential returns per unit of risk. BBB Foods is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,395 in BBB Foods on September 3, 2024 and sell it today you would earn a total of 427.00 from holding BBB Foods or generate 17.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pekin Life Insurance vs. BBB Foods
Performance |
| Timeline |
| Pekin Life Insurance |
| BBB Foods |
Pekin Life and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pekin Life and BBB Foods
The main advantage of trading using opposite Pekin Life and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pekin Life position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.| Pekin Life vs. FG Annuities Life | Pekin Life vs. MetLife Preferred Stock | Pekin Life vs. Brighthouse Financial | Pekin Life vs. MetLife Preferred Stock |
| BBB Foods vs. NetSol Technologies | BBB Foods vs. Analog Devices | BBB Foods vs. FARO Technologies | BBB Foods vs. Getty Images Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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