Correlation Between BBB Foods and Drilling Tools
Can any of the company-specific risk be diversified away by investing in both BBB Foods and Drilling Tools 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 BBB Foods and Drilling Tools into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Drilling Tools International, you can compare the effects of market volatilities on BBB Foods and Drilling Tools 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 BBB Foods with a short position of Drilling Tools. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Drilling Tools.
Diversification Opportunities for BBB Foods and Drilling Tools
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BBB and Drilling is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Drilling Tools International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drilling Tools Inter and BBB Foods 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 BBB Foods are associated (or correlated) with Drilling Tools. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drilling Tools Inter has no effect on the direction of BBB Foods i.e., BBB Foods and Drilling Tools go up and down completely randomly.
Pair Corralation between BBB Foods and Drilling Tools
Given the investment horizon of 90 days BBB Foods is expected to generate 0.77 times more return on investment than Drilling Tools. However, BBB Foods is 1.29 times less risky than Drilling Tools. It trades about 0.09 of its potential returns per unit of risk. Drilling Tools International is currently generating about 0.05 per unit of risk. If you would invest 3,236 in BBB Foods on August 24, 2024 and sell it today you would earn a total of 104.00 from holding BBB Foods or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBB Foods vs. Drilling Tools International
Performance |
| Timeline |
| BBB Foods |
| Drilling Tools Inter |
BBB Foods and Drilling Tools Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Drilling Tools
The main advantage of trading using opposite BBB Foods and Drilling Tools positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, Drilling Tools 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 Drilling Tools will offset losses from the drop in Drilling Tools' long position.| BBB Foods vs. Doubledown Interactive Co | BBB Foods vs. Golden Matrix Group | BBB Foods vs. Boyd Gaming | BBB Foods vs. Playstudios |
| Drilling Tools vs. Waters | Drilling Tools vs. BioNTech SE | Drilling Tools vs. Centessa Pharmaceuticals PLC | Drilling Tools vs. Repligen |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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