Correlation Between Bt Brands and Global Partner

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

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

Diversification Opportunities for Bt Brands and Global Partner

0.35

Correlation Coefficient

Bt Brands  Global Partner

Weak diversification

The 3 months correlation between BTBD and Global is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and Global Partner Acq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partner Acq and Bt Brands 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 Bt Brands are associated (or correlated) with Global Partner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partner Acq has no effect on the direction of Bt Brands i.e., Bt Brands and Global Partner go up and down completely randomly.

Pair Corralation between Bt Brands and Global Partner

Given the investment horizon of 90 days Bt Brands is expected to generate 6.62 times more return on investment than Global Partner. However, Bt Brands is 6.62 times more volatile than Global Partner Acq. It trades about 0.02 of its potential returns per unit of risk. Global Partner Acq is currently generating about 0.0 per unit of risk. If you would invest  183.00  in Bt Brands on September 4, 2024 and sell it today you would lose (28.00) from holding Bt Brands or give up 15.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	79.19%
Values	Daily Returns

Bt Brands  vs.  Global Partner Acq

Bt Brands

Risk-Adjusted Performance

1 of 100

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Global Partner Acq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Partner Acq has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Global Partner is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bt Brands and Global Partner

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

The idea behind Bt Brands and Global Partner Acq 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..