Correlation Between Coinbase Global and Bannerman Resources

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

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

Diversification Opportunities for Coinbase Global and Bannerman Resources

-0.34

Correlation Coefficient

Coinbase Global  Bannerman Resources

Very good diversification

The 3 months correlation between Coinbase and Bannerman is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Coinbase Global and Bannerman Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bannerman Resources and Coinbase Global 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 Coinbase Global are associated (or correlated) with Bannerman Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bannerman Resources has no effect on the direction of Coinbase Global i.e., Coinbase Global and Bannerman Resources go up and down completely randomly.

Pair Corralation between Coinbase Global and Bannerman Resources

Given the investment horizon of 90 days Coinbase Global is expected to generate 1.74 times more return on investment than Bannerman Resources. However, Coinbase Global is 1.74 times more volatile than Bannerman Resources. It trades about 0.19 of its potential returns per unit of risk. Bannerman Resources is currently generating about 0.07 per unit of risk. If you would invest  16,150  in Coinbase Global on September 14, 2024 and sell it today you would earn a total of  15,321  from holding Coinbase Global or generate 94.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Coinbase Global  vs.  Bannerman Resources

Coinbase Global

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coinbase Global are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Coinbase Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Bannerman Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bannerman Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Bannerman Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coinbase Global and Bannerman Resources

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

The idea behind Coinbase Global and Bannerman Resources 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.