Correlation Between Bravura Solutions and Beach Energy
Can any of the company-specific risk be diversified away by investing in both Bravura Solutions and Beach Energy 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 Bravura Solutions and Beach Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bravura Solutions and Beach Energy, you can compare the effects of market volatilities on Bravura Solutions and Beach Energy 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 Bravura Solutions with a short position of Beach Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bravura Solutions and Beach Energy.
Diversification Opportunities for Bravura Solutions and Beach Energy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bravura and Beach is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bravura Solutions and Beach Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beach Energy and Bravura Solutions 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 Bravura Solutions are associated (or correlated) with Beach Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beach Energy has no effect on the direction of Bravura Solutions i.e., Bravura Solutions and Beach Energy go up and down completely randomly.
Pair Corralation between Bravura Solutions and Beach Energy
Assuming the 90 days trading horizon Bravura Solutions is expected to generate 1.57 times more return on investment than Beach Energy. However, Bravura Solutions is 1.57 times more volatile than Beach Energy. It trades about 0.21 of its potential returns per unit of risk. Beach Energy is currently generating about 0.1 per unit of risk. If you would invest 134.00 in Bravura Solutions on September 24, 2024 and sell it today you would earn a total of 74.00 from holding Bravura Solutions or generate 55.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Bravura Solutions vs. Beach Energy
Performance |
Timeline |
Bravura Solutions |
Beach Energy |
Bravura Solutions and Beach Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bravura Solutions and Beach Energy
The main advantage of trading using opposite Bravura Solutions and Beach Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bravura Solutions position performs unexpectedly, Beach Energy 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 Beach Energy will offset losses from the drop in Beach Energy's long position.Bravura Solutions vs. Aneka Tambang Tbk | Bravura Solutions vs. National Australia Bank | Bravura Solutions vs. Commonwealth Bank of | Bravura Solutions vs. Commonwealth Bank of |
Beach Energy vs. Westpac Banking | Beach Energy vs. ABACUS STORAGE KING | Beach Energy vs. Odyssey Energy | Beach Energy vs. Suncorp Group |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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