Correlation Between Auddia and BT Brands

Can any of the company-specific risk be diversified away by investing in both Auddia and BT Brands 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 Auddia and BT Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Auddia Inc and BT Brands Warrant, you can compare the effects of market volatilities on Auddia and BT Brands 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 Auddia with a short position of BT Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auddia and BT Brands.

Diversification Opportunities for Auddia and BT Brands

-0.23

Correlation Coefficient

Auddia  BT Brands

Very good diversification

The 3 months correlation between Auddia and BTBDW is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Auddia Inc and BT Brands Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BT Brands Warrant and Auddia 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 Auddia Inc are associated (or correlated) with BT Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BT Brands Warrant has no effect on the direction of Auddia i.e., Auddia and BT Brands go up and down completely randomly.

Pair Corralation between Auddia and BT Brands

Assuming the 90 days horizon Auddia is expected to generate 1.09 times less return on investment than BT Brands. In addition to that, Auddia is 1.22 times more volatile than BT Brands Warrant. It trades about 0.09 of its total potential returns per unit of risk. BT Brands Warrant is currently generating about 0.12 per unit of volatility. If you would invest  8.96  in BT Brands Warrant on September 13, 2024 and sell it today you would earn a total of  0.43  from holding BT Brands Warrant or generate 4.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	34.88%
Values	Daily Returns

Auddia Inc  vs.  BT Brands Warrant

Auddia Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Auddia Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental indicators, Auddia showed solid returns over the last few months and may actually be approaching a breakup point.

BT Brands Warrant

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days BT Brands Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unsteady fundamental indicators, BT Brands showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Auddia and BT Brands

The main advantage of trading using opposite Auddia and BT Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auddia position performs unexpectedly, BT Brands 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 Brands will offset losses from the drop in BT Brands' long position.

The idea behind Auddia Inc and BT Brands Warrant 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.