Correlation Between British American and Team Internet
Can any of the company-specific risk be diversified away by investing in both British American and Team Internet 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 Team Internet 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 Team Internet Group, you can compare the effects of market volatilities on British American and Team Internet 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 Team Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Team Internet.
Diversification Opportunities for British American and Team Internet
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between British and Team is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Team Internet Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Team Internet Group 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 Team Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Team Internet Group has no effect on the direction of British American i.e., British American and Team Internet go up and down completely randomly.
Pair Corralation between British American and Team Internet
Assuming the 90 days trading horizon British American Tobacco is expected to generate 1.06 times more return on investment than Team Internet. However, British American is 1.06 times more volatile than Team Internet Group. It trades about 0.02 of its potential returns per unit of risk. Team Internet Group is currently generating about -0.03 per unit of risk. If you would invest 3,385 in British American Tobacco on September 3, 2024 and sell it today you would earn a total of 412.00 from holding British American Tobacco or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Team Internet Group
Performance |
| Timeline |
| British American Tobacco |
| Team Internet Group |
British American and Team Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Team Internet
The main advantage of trading using opposite British American and Team Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Team Internet 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 Team Internet will offset losses from the drop in Team Internet'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 |
| Team Internet vs. Molson Coors Beverage | Team Internet vs. Jupiter Fund Management | Team Internet vs. Tatton Asset Management | Team Internet vs. Kaufman Et Broad |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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