Correlation Between United Guardian and BRC

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

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

Diversification Opportunities for United Guardian and BRC

0.78

Correlation Coefficient

United Guardian  BRC

Poor diversification

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

Pair Corralation between United Guardian and BRC

Allowing for the 90-day total investment horizon United Guardian is expected to under-perform the BRC. In addition to that, United Guardian is 1.28 times more volatile than BRC Inc. It trades about -0.14 of its total potential returns per unit of risk. BRC Inc is currently generating about -0.02 per unit of volatility. If you would invest  331.00  in BRC Inc on September 13, 2024 and sell it today you would lose (19.00) from holding BRC Inc or give up 5.74% of portfolio value over 90 days.

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

United Guardian  vs.  BRC Inc

United Guardian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Guardian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BRC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, BRC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with United Guardian and BRC

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

The idea behind United Guardian and BRC Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.