Correlation Between British American and Grieg Seafood
Can any of the company-specific risk be diversified away by investing in both British American and Grieg Seafood 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 Grieg Seafood 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 Grieg Seafood, you can compare the effects of market volatilities on British American and Grieg Seafood 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 Grieg Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Grieg Seafood.
Diversification Opportunities for British American and Grieg Seafood
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between British and Grieg is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Grieg Seafood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grieg Seafood 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 Grieg Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grieg Seafood has no effect on the direction of British American i.e., British American and Grieg Seafood go up and down completely randomly.
Pair Corralation between British American and Grieg Seafood
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.23 times more return on investment than Grieg Seafood. However, British American Tobacco is 4.35 times less risky than Grieg Seafood. It trades about 0.49 of its potential returns per unit of risk. Grieg Seafood is currently generating about -0.23 per unit of risk. If you would invest 3,489 in British American Tobacco on August 29, 2024 and sell it today you would earn a total of 264.00 from holding British American Tobacco or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Grieg Seafood
Performance |
| Timeline |
| British American Tobacco |
| Grieg Seafood |
British American and Grieg Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Grieg Seafood
The main advantage of trading using opposite British American and Grieg Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Grieg Seafood 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 Grieg Seafood will offset losses from the drop in Grieg Seafood's long position.| British American vs. Lendinvest PLC | British American vs. Neometals | British American vs. Coor Service Management | British American vs. Albion Technology General |
| Grieg Seafood vs. Lendinvest PLC | Grieg Seafood vs. Neometals | Grieg Seafood vs. Coor Service Management | Grieg Seafood vs. Albion Technology General |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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