Correlation Between British American and Qurate Retail
Can any of the company-specific risk be diversified away by investing in both British American and Qurate Retail 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 British American and Qurate Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Qurate Retail Series, you can compare the effects of market volatilities on British American and Qurate Retail 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 British American with a short position of Qurate Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Qurate Retail.
Diversification Opportunities for British American and Qurate Retail
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between British and Qurate is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Qurate Retail Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qurate Retail Series and British American 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 British American Tobacco are associated (or correlated) with Qurate Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qurate Retail Series has no effect on the direction of British American i.e., British American and Qurate Retail go up and down completely randomly.
Pair Corralation between British American and Qurate Retail
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.35 times more return on investment than Qurate Retail. However, British American Tobacco is 2.9 times less risky than Qurate Retail. It trades about 0.08 of its potential returns per unit of risk. Qurate Retail Series is currently generating about -0.06 per unit of risk. If you would invest 2,691 in British American Tobacco on September 25, 2024 and sell it today you would earn a total of 919.00 from holding British American Tobacco or generate 34.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
British American Tobacco vs. Qurate Retail Series
Performance |
| Timeline |
| British American Tobacco |
| Qurate Retail Series |
British American and Qurate Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Qurate Retail
The main advantage of trading using opposite British American and Qurate Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Qurate Retail 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 Qurate Retail will offset losses from the drop in Qurate Retail's long position.| British American vs. The Mercantile Investment | British American vs. Cellnex Telecom SA | British American vs. Aeorema Communications Plc | British American vs. Lowland Investment Co |
| Qurate Retail vs. Uniper SE | Qurate Retail vs. Mulberry Group PLC | Qurate Retail vs. London Security Plc | Qurate Retail vs. Triad Group PLC |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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