Correlation Between US Financial and Bragg Gaming

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

By analyzing existing cross correlation between US Financial 15 and Bragg Gaming Group, you can compare the effects of market volatilities on US Financial and Bragg Gaming 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 US Financial with a short position of Bragg Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and Bragg Gaming.

Diversification Opportunities for US Financial and Bragg Gaming

-0.78

Correlation Coefficient

US Financial  Bragg Gaming

Pay attention - limited upside

The 3 months correlation between FTU-PB and Bragg is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 and Bragg Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bragg Gaming Group and US Financial 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 US Financial 15 are associated (or correlated) with Bragg Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bragg Gaming Group has no effect on the direction of US Financial i.e., US Financial and Bragg Gaming go up and down completely randomly.

Pair Corralation between US Financial and Bragg Gaming

Assuming the 90 days trading horizon US Financial 15 is expected to under-perform the Bragg Gaming. But the preferred stock apears to be less risky and, when comparing its historical volatility, US Financial 15 is 3.87 times less risky than Bragg Gaming. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Bragg Gaming Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  460.00  in Bragg Gaming Group on September 23, 2024 and sell it today you would earn a total of  38.00  from holding Bragg Gaming Group or generate 8.26% return on investment over 90 days.

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

US Financial 15  vs.  Bragg Gaming Group

US Financial 15

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in US Financial 15 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, US Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Bragg Gaming Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bragg Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with US Financial and Bragg Gaming

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

The idea behind US Financial 15 and Bragg Gaming Group 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.