Correlation Between BSP Financial and Bendigo

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

By analyzing existing cross correlation between BSP Financial Group and Bendigo And Adelaide, you can compare the effects of market volatilities on BSP Financial and Bendigo 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 BSP Financial with a short position of Bendigo. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSP Financial and Bendigo.

Diversification Opportunities for BSP Financial and Bendigo

0.55

Correlation Coefficient

BSP Financial  Bendigo

Very weak diversification

The 3 months correlation between BSP and Bendigo is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding BSP Financial Group and Bendigo And Adelaide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bendigo And Adelaide and BSP Financial 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 BSP Financial Group are associated (or correlated) with Bendigo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bendigo And Adelaide has no effect on the direction of BSP Financial i.e., BSP Financial and Bendigo go up and down completely randomly.

Pair Corralation between BSP Financial and Bendigo

Assuming the 90 days trading horizon BSP Financial is expected to generate 1.88 times less return on investment than Bendigo. In addition to that, BSP Financial is 1.59 times more volatile than Bendigo And Adelaide. It trades about 0.06 of its total potential returns per unit of risk. Bendigo And Adelaide is currently generating about 0.19 per unit of volatility. If you would invest  1,160  in Bendigo And Adelaide on October 1, 2024 and sell it today you would earn a total of  159.00  from holding Bendigo And Adelaide or generate 13.71% return on investment over 90 days.

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

BSP Financial Group  vs.  Bendigo And Adelaide

BSP Financial Group

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BSP Financial Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, BSP Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bendigo And Adelaide

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bendigo And Adelaide are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bendigo unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BSP Financial and Bendigo

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

The idea behind BSP Financial Group and Bendigo And Adelaide 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 Global Correlations module to find global opportunities by holding instruments from different markets.