Correlation Between Si Bone and Bruker
Can any of the company-specific risk be diversified away by investing in both Si Bone and Bruker 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 Si Bone and Bruker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Si Bone and Bruker, you can compare the effects of market volatilities on Si Bone and Bruker 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 Si Bone with a short position of Bruker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Si Bone and Bruker.
Diversification Opportunities for Si Bone and Bruker
Very weak diversification
The 3 months correlation between SIBN and Bruker is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Si Bone and Bruker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bruker and Si Bone 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 Si Bone are associated (or correlated) with Bruker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bruker has no effect on the direction of Si Bone i.e., Si Bone and Bruker go up and down completely randomly.
Pair Corralation between Si Bone and Bruker
Given the investment horizon of 90 days Si Bone is expected to generate 1.42 times more return on investment than Bruker. However, Si Bone is 1.42 times more volatile than Bruker. It trades about 0.02 of its potential returns per unit of risk. Bruker is currently generating about 0.0 per unit of risk. If you would invest 1,213 in Si Bone on August 28, 2024 and sell it today you would earn a total of 52.00 from holding Si Bone or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Si Bone vs. Bruker
Performance |
| Timeline |
| Si Bone |
| Bruker |
Si Bone and Bruker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Si Bone and Bruker
The main advantage of trading using opposite Si Bone and Bruker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Si Bone position performs unexpectedly, Bruker 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 Bruker will offset losses from the drop in Bruker's long position.The idea behind Si Bone and Bruker pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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