Correlation Between BKV and EI Du

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Can any of the company-specific risk be diversified away by investing in both BKV and EI Du 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 BKV and EI Du into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BKV Corporation and EI du Pont, you can compare the effects of market volatilities on BKV and EI Du 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 BKV with a short position of EI Du. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKV and EI Du.

Diversification Opportunities for BKV and EI Du

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between BKV and CTA-P-A is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BKV Corp. and EI du Pont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EI du Pont and BKV 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 BKV Corporation are associated (or correlated) with EI Du. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EI du Pont has no effect on the direction of BKV i.e., BKV and EI Du go up and down completely randomly.

Pair Corralation between BKV and EI Du

Considering the 90-day investment horizon BKV Corporation is expected to generate 0.85 times more return on investment than EI Du. However, BKV Corporation is 1.18 times less risky than EI Du. It trades about 0.19 of its potential returns per unit of risk. EI du Pont is currently generating about -0.17 per unit of risk. If you would invest  1,829  in BKV Corporation on September 29, 2024 and sell it today you would earn a total of  424.00  from holding BKV Corporation or generate 23.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy66.67%
ValuesDaily Returns

BKV Corp.  vs.  EI du Pont

 Performance 
       Timeline  
BKV Corporation 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.
EI du Pont 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days EI du Pont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BKV and EI Du Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BKV and EI Du

The main advantage of trading using opposite BKV and EI Du positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKV position performs unexpectedly, EI Du 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 EI Du will offset losses from the drop in EI Du's long position.
The idea behind BKV Corporation and EI du Pont 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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