Correlation Between RTW Venture and BT Group
Can any of the company-specific risk be diversified away by investing in both RTW Venture and BT Group 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 RTW Venture and BT Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RTW Venture Fund and BT Group Plc, you can compare the effects of market volatilities on RTW Venture and BT Group 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 RTW Venture with a short position of BT Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of RTW Venture and BT Group.
Diversification Opportunities for RTW Venture and BT Group
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RTW and BT-A is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding RTW Venture Fund and BT Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BT Group Plc and RTW Venture 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 RTW Venture Fund are associated (or correlated) with BT Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BT Group Plc has no effect on the direction of RTW Venture i.e., RTW Venture and BT Group go up and down completely randomly.
Pair Corralation between RTW Venture and BT Group
Assuming the 90 days trading horizon RTW Venture Fund is expected to under-perform the BT Group. But the stock apears to be less risky and, when comparing its historical volatility, RTW Venture Fund is 2.39 times less risky than BT Group. The stock trades about -0.1 of its potential returns per unit of risk. The BT Group Plc is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 13,825 in BT Group Plc on September 1, 2024 and sell it today you would earn a total of 2,105 from holding BT Group Plc or generate 15.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RTW Venture Fund vs. BT Group Plc
Performance |
| Timeline |
| RTW Venture Fund |
| BT Group Plc |
RTW Venture and BT Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RTW Venture and BT Group
The main advantage of trading using opposite RTW Venture and BT Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RTW Venture position performs unexpectedly, BT Group 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 BT Group will offset losses from the drop in BT Group's long position.| RTW Venture vs. Atresmedia | RTW Venture vs. XLMedia PLC | RTW Venture vs. Charter Communications Cl | RTW Venture vs. Verizon Communications |
| BT Group vs. Bloomsbury Publishing Plc | BT Group vs. Bytes Technology | BT Group vs. Spotify Technology SA | BT Group vs. JB Hunt Transport |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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