Correlation Between Brown Forman and BECLE SAB
Can any of the company-specific risk be diversified away by investing in both Brown Forman and BECLE SAB 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 Brown Forman and BECLE SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brown Forman and BECLE SAB DE, you can compare the effects of market volatilities on Brown Forman and BECLE SAB 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 Brown Forman with a short position of BECLE SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brown Forman and BECLE SAB.
Diversification Opportunities for Brown Forman and BECLE SAB
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brown and BECLE is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Brown Forman and BECLE SAB DE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BECLE SAB DE and Brown Forman 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 Brown Forman are associated (or correlated) with BECLE SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BECLE SAB DE has no effect on the direction of Brown Forman i.e., Brown Forman and BECLE SAB go up and down completely randomly.
Pair Corralation between Brown Forman and BECLE SAB
Assuming the 90 days trading horizon Brown Forman is expected to generate 0.61 times more return on investment than BECLE SAB. However, Brown Forman is 1.64 times less risky than BECLE SAB. It trades about -0.05 of its potential returns per unit of risk. BECLE SAB DE is currently generating about -0.09 per unit of risk. If you would invest 4,251 in Brown Forman on September 26, 2024 and sell it today you would lose (323.00) from holding Brown Forman or give up 7.6% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Brown Forman vs. BECLE SAB DE
Performance |
Timeline |
Brown Forman |
BECLE SAB DE |
Brown Forman and BECLE SAB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Brown Forman and BECLE SAB
The main advantage of trading using opposite Brown Forman and BECLE SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brown Forman position performs unexpectedly, BECLE SAB 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 BECLE SAB will offset losses from the drop in BECLE SAB's long position.Brown Forman vs. Constellation Brands | Brown Forman vs. Thai Beverage Public | Brown Forman vs. Rmy Cointreau SA | Brown Forman vs. BECLE SAB DE |
BECLE SAB vs. Constellation Brands | BECLE SAB vs. Brown Forman | BECLE SAB vs. Thai Beverage Public | BECLE SAB vs. Rmy Cointreau SA |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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