Correlation Between Bt Brands and Siriuspoint

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

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

Diversification Opportunities for Bt Brands and Siriuspoint

-0.41

Correlation Coefficient

Bt Brands  Siriuspoint

Very good diversification

The 3 months correlation between BTBD and Siriuspoint is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint and Bt Brands 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 Bt Brands are associated (or correlated) with Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of Bt Brands i.e., Bt Brands and Siriuspoint go up and down completely randomly.

Pair Corralation between Bt Brands and Siriuspoint

Given the investment horizon of 90 days Bt Brands is expected to under-perform the Siriuspoint. In addition to that, Bt Brands is 3.19 times more volatile than Siriuspoint. It trades about -0.01 of its total potential returns per unit of risk. Siriuspoint is currently generating about 0.07 per unit of volatility. If you would invest  1,168  in Siriuspoint on September 14, 2024 and sell it today you would earn a total of  387.00  from holding Siriuspoint or generate 33.13% return on investment over 90 days.

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

Bt Brands  vs.  Siriuspoint

Bt Brands

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Bt Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Bt Brands is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Siriuspoint

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Siriuspoint may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bt Brands and Siriuspoint

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

The idea behind Bt Brands and Siriuspoint 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.