Correlation Between BBB Foods and Postal Realty
Can any of the company-specific risk be diversified away by investing in both BBB Foods and Postal Realty 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 Postal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Postal Realty Trust, you can compare the effects of market volatilities on BBB Foods and Postal Realty 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 Postal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Postal Realty.
Diversification Opportunities for BBB Foods and Postal Realty
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between BBB and Postal is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Postal Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Realty Trust 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 Postal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Realty Trust has no effect on the direction of BBB Foods i.e., BBB Foods and Postal Realty go up and down completely randomly.
Pair Corralation between BBB Foods and Postal Realty
Given the investment horizon of 90 days BBB Foods is expected to generate 3.18 times more return on investment than Postal Realty. However, BBB Foods is 3.18 times more volatile than Postal Realty Trust. It trades about 0.09 of its potential returns per unit of risk. Postal Realty Trust is currently generating about 0.02 per unit of risk. If you would invest 1,750 in BBB Foods on September 3, 2024 and sell it today you would earn a total of 1,034 from holding BBB Foods or generate 59.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.4% |
| Values | Daily Returns |
BBB Foods vs. Postal Realty Trust
Performance |
| Timeline |
| BBB Foods |
| Postal Realty Trust |
BBB Foods and Postal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Postal Realty
The main advantage of trading using opposite BBB Foods and Postal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, Postal Realty 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 Postal Realty will offset losses from the drop in Postal Realty's long position.| BBB Foods vs. NetSol Technologies | BBB Foods vs. Analog Devices | BBB Foods vs. FARO Technologies | BBB Foods vs. Getty Images Holdings |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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