Correlation Between BT Brands and Noble Romans

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

By analyzing existing cross correlation between BT Brands Warrant and Noble Romans, you can compare the effects of market volatilities on BT Brands and Noble Romans 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 Noble Romans. Check out your portfolio center. Please also check ongoing floating volatility patterns of BT Brands and Noble Romans.

Diversification Opportunities for BT Brands and Noble Romans

0.12

Correlation Coefficient

BT Brands  Noble Romans

Average diversification

The 3 months correlation between BTBDW and Noble is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BT Brands Warrant and Noble Romans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble Romans 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 Warrant are associated (or correlated) with Noble Romans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble Romans has no effect on the direction of BT Brands i.e., BT Brands and Noble Romans go up and down completely randomly.

Pair Corralation between BT Brands and Noble Romans

Assuming the 90 days horizon BT Brands Warrant is expected to generate 2.85 times more return on investment than Noble Romans. However, BT Brands is 2.85 times more volatile than Noble Romans. It trades about 0.12 of its potential returns per unit of risk. Noble Romans is currently generating about 0.03 per unit of risk. If you would invest  8.96  in BT Brands Warrant on September 14, 2024 and sell it today you would earn a total of  0.43  from holding BT Brands Warrant or generate 4.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	22.22%
Values	Daily Returns

BT Brands Warrant  vs.  Noble Romans

BT Brands Warrant

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days BT Brands Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unfluctuating fundamental indicators, BT Brands showed solid returns over the last few months and may actually be approaching a breakup point.

Noble Romans

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Noble Romans are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Noble Romans displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BT Brands and Noble Romans

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

The idea behind BT Brands Warrant and Noble Romans 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..