Correlation Between British American and Octopus Aim
Can any of the company-specific risk be diversified away by investing in both British American and Octopus Aim 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 Octopus Aim 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 Octopus Aim Vct, you can compare the effects of market volatilities on British American and Octopus Aim 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 Octopus Aim. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Octopus Aim.
Diversification Opportunities for British American and Octopus Aim
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between British and Octopus is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Octopus Aim Vct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Octopus Aim Vct 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 Octopus Aim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Octopus Aim Vct has no effect on the direction of British American i.e., British American and Octopus Aim go up and down completely randomly.
Pair Corralation between British American and Octopus Aim
Assuming the 90 days trading horizon British American Tobacco is expected to generate 3.61 times more return on investment than Octopus Aim. However, British American is 3.61 times more volatile than Octopus Aim Vct. It trades about 0.03 of its potential returns per unit of risk. Octopus Aim Vct is currently generating about -0.07 per unit of risk. If you would invest 3,162 in British American Tobacco on November 5, 2024 and sell it today you would earn a total of 810.00 from holding British American Tobacco or generate 25.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Octopus Aim Vct
Performance |
| Timeline |
| British American Tobacco |
| Octopus Aim Vct |
British American and Octopus Aim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Octopus Aim
The main advantage of trading using opposite British American and Octopus Aim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Octopus Aim 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 Octopus Aim will offset losses from the drop in Octopus Aim's long position.| British American vs. United Internet AG | British American vs. Aeorema Communications Plc | British American vs. Fulcrum Metals PLC | British American vs. Golden Metal Resources |
| Octopus Aim vs. Endeavour Mining Corp | Octopus Aim vs. Scottish American Investment | Octopus Aim vs. Herald Investment Trust | Octopus Aim vs. OneSavings Bank 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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