Correlation Between Manitou BF and Burelle SA

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

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

Diversification Opportunities for Manitou BF and Burelle SA

0.75

Correlation Coefficient

Manitou BF  Burelle SA

Poor diversification

The 3 months correlation between Manitou and Burelle is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Manitou BF SA and Burelle SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burelle SA and Manitou BF 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 Manitou BF SA are associated (or correlated) with Burelle SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burelle SA has no effect on the direction of Manitou BF i.e., Manitou BF and Burelle SA go up and down completely randomly.

Pair Corralation between Manitou BF and Burelle SA

Assuming the 90 days trading horizon Manitou BF SA is expected to under-perform the Burelle SA. But the stock apears to be less risky and, when comparing its historical volatility, Manitou BF SA is 1.06 times less risky than Burelle SA. The stock trades about -0.11 of its potential returns per unit of risk. The Burelle SA is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  35,500  in Burelle SA on September 3, 2024 and sell it today you would lose (3,500) from holding Burelle SA or give up 9.86% of portfolio value over 90 days.

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

Manitou BF SA  vs.  Burelle SA

Manitou BF SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manitou BF SA 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Burelle SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Burelle SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Manitou BF and Burelle SA

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

The idea behind Manitou BF SA and Burelle SA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.