Correlation Between British American and Blackrock World
Can any of the company-specific risk be diversified away by investing in both British American and Blackrock World 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 Blackrock World 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 Blackrock World Mining, you can compare the effects of market volatilities on British American and Blackrock World 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 Blackrock World. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Blackrock World.
Diversification Opportunities for British American and Blackrock World
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between British and Blackrock is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Blackrock World Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock World Mining 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 Blackrock World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock World Mining has no effect on the direction of British American i.e., British American and Blackrock World go up and down completely randomly.
Pair Corralation between British American and Blackrock World
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.34 times more return on investment than Blackrock World. However, British American Tobacco is 2.92 times less risky than Blackrock World. It trades about 0.65 of its potential returns per unit of risk. Blackrock World Mining is currently generating about -0.11 per unit of risk. If you would invest 3,503 in British American Tobacco on September 2, 2024 and sell it today you would earn a total of 294.00 from holding British American Tobacco or generate 8.39% 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. Blackrock World Mining
Performance |
| Timeline |
| British American Tobacco |
| Blackrock World Mining |
British American and Blackrock World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Blackrock World
The main advantage of trading using opposite British American and Blackrock World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Blackrock World 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 Blackrock World will offset losses from the drop in Blackrock World's long position.| British American vs. Uniper SE | British American vs. Mulberry Group PLC | British American vs. London Security Plc | British American vs. Triad Group PLC |
| Blackrock World vs. Charter Communications Cl | Blackrock World vs. Gaztransport et Technigaz | Blackrock World vs. United Utilities Group | Blackrock World vs. Cairo Communication SpA |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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