Correlation Between Bbh Income and Bbh Limited

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

By analyzing existing cross correlation between Bbh Income Fund and Bbh Limited Duration, you can compare the effects of market volatilities on Bbh Income and Bbh Limited 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 Bbh Income with a short position of Bbh Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bbh Income and Bbh Limited.

Diversification Opportunities for Bbh Income and Bbh Limited

-0.48

Correlation Coefficient

Bbh Income  Bbh Limited

Very good diversification

The 3 months correlation between Bbh and BBH is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bbh Income Fund and Bbh Limited Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bbh Limited Duration and Bbh Income 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 Bbh Income Fund are associated (or correlated) with Bbh Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bbh Limited Duration has no effect on the direction of Bbh Income i.e., Bbh Income and Bbh Limited go up and down completely randomly.

Pair Corralation between Bbh Income and Bbh Limited

Assuming the 90 days horizon Bbh Income is expected to generate 1.1 times less return on investment than Bbh Limited. In addition to that, Bbh Income is 3.77 times more volatile than Bbh Limited Duration. It trades about 0.06 of its total potential returns per unit of risk. Bbh Limited Duration is currently generating about 0.26 per unit of volatility. If you would invest  914.00  in Bbh Limited Duration on August 30, 2024 and sell it today you would earn a total of  129.00  from holding Bbh Limited Duration or generate 14.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bbh Income Fund  vs.  Bbh Limited Duration

Bbh Income Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bbh Income Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Bbh Income is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Bbh Limited Duration

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bbh Limited Duration are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Bbh Limited is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bbh Income and Bbh Limited

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

The idea behind Bbh Income Fund and Bbh Limited Duration 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.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.