Correlation Between United and Bt Brands

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

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

Diversification Opportunities for United and Bt Brands

0.0

Correlation Coefficient

United  Bt Brands

Pay attention - limited upside

The 3 months correlation between United and BTBD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding United States Cellular and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands and United 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 States Cellular are associated (or correlated) with Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of United i.e., United and Bt Brands go up and down completely randomly.

Pair Corralation between United and Bt Brands

Assuming the 90 days trading horizon United States Cellular is expected to under-perform the Bt Brands. But the bond apears to be less risky and, when comparing its historical volatility, United States Cellular is 1.6 times less risky than Bt Brands. The bond trades about -0.14 of its potential returns per unit of risk. The Bt Brands is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  163.00  in Bt Brands on September 15, 2024 and sell it today you would lose (3.00) from holding Bt Brands or give up 1.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

United States Cellular  vs.  Bt Brands

United States Cellular

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Cellular has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond'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 United States Cellular investors.

Bt Brands

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bt Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Bt Brands is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with United and Bt Brands

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

The idea behind United States Cellular and Bt Brands 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.