Correlation Between Alphabet and BH

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

By analyzing existing cross correlation between Alphabet Inc Class C and BH Co, you can compare the effects of market volatilities on Alphabet and BH 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 Alphabet with a short position of BH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and BH.

Diversification Opportunities for Alphabet and BH

-0.82

Correlation Coefficient

Alphabet  BH

Pay attention - limited upside

The 3 months correlation between Alphabet and BH is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and BH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Co and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with BH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Co has no effect on the direction of Alphabet i.e., Alphabet and BH go up and down completely randomly.

Pair Corralation between Alphabet and BH

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.45 times more return on investment than BH. However, Alphabet Inc Class C is 2.23 times less risky than BH. It trades about 0.09 of its potential returns per unit of risk. BH Co is currently generating about -0.15 per unit of risk. If you would invest  15,840  in Alphabet Inc Class C on August 31, 2024 and sell it today you would earn a total of  1,242  from holding Alphabet Inc Class C or generate 7.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	92.06%
Values	Daily Returns

Alphabet Inc Class C  vs.  BH Co

Alphabet Class C

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet may actually be approaching a critical reversion point that can send shares even higher in December 2024.

BH Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BH Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alphabet and BH

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

The idea behind Alphabet Inc Class C and BH Co 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.