Correlation Between British American and Federal Realty
Can any of the company-specific risk be diversified away by investing in both British American and Federal Realty 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 Federal Realty 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 Federal Realty Investment, you can compare the effects of market volatilities on British American and Federal Realty 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 Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Federal Realty.
Diversification Opportunities for British American and Federal Realty
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between British and Federal is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment 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 Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of British American i.e., British American and Federal Realty go up and down completely randomly.
Pair Corralation between British American and Federal Realty
Assuming the 90 days trading horizon British American Tobacco is expected to generate 1.42 times more return on investment than Federal Realty. However, British American is 1.42 times more volatile than Federal Realty Investment. It trades about 0.15 of its potential returns per unit of risk. Federal Realty Investment is currently generating about 0.13 per unit of risk. If you would invest 2,961 in British American Tobacco on September 3, 2024 and sell it today you would earn a total of 836.00 from holding British American Tobacco or generate 28.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.12% |
| Values | Daily Returns |
British American Tobacco vs. Federal Realty Investment
Performance |
| Timeline |
| British American Tobacco |
| Federal Realty Investment |
British American and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Federal Realty
The main advantage of trading using opposite British American and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Federal Realty 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 Federal Realty will offset losses from the drop in Federal Realty's long position.| British American vs. FC Investment Trust | British American vs. Smithson Investment Trust | British American vs. Westlake Chemical Corp | British American vs. The Mercantile Investment |
| Federal Realty vs. Amedeo Air Four | Federal Realty vs. Sealed Air Corp | Federal Realty vs. European Metals Holdings | Federal Realty vs. Pentair 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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