Correlation Between BT Brands and Vail Resorts

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

By analyzing existing cross correlation between BT Brands Warrant and Vail Resorts, you can compare the effects of market volatilities on BT Brands and Vail Resorts 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 Vail Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of BT Brands and Vail Resorts.

Diversification Opportunities for BT Brands and Vail Resorts

-0.26

Correlation Coefficient

BT Brands  Vail Resorts

Very good diversification

The 3 months correlation between BTBDW and Vail is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding BT Brands Warrant and Vail Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vail Resorts 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 Warrant are associated (or correlated) with Vail Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vail Resorts has no effect on the direction of BT Brands i.e., BT Brands and Vail Resorts go up and down completely randomly.

Pair Corralation between BT Brands and Vail Resorts

Assuming the 90 days horizon BT Brands Warrant is expected to generate 35.12 times more return on investment than Vail Resorts. However, BT Brands is 35.12 times more volatile than Vail Resorts. It trades about 0.2 of its potential returns per unit of risk. Vail Resorts is currently generating about 0.07 per unit of risk. If you would invest  4.76  in BT Brands Warrant on May 7, 2025 and sell it today you would earn a total of  35.24  from holding BT Brands Warrant or generate 740.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	58.06%
Values	Daily Returns

BT Brands Warrant  vs.  Vail Resorts

BT Brands Warrant

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BT Brands Warrant are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, BT Brands showed solid returns over the last few months and may actually be approaching a breakup point.

Vail Resorts

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Vail Resorts are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Vail Resorts may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with BT Brands and Vail Resorts

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

The idea behind BT Brands Warrant and Vail Resorts 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.