Correlation Between UNIQA Insurance and British American
Can any of the company-specific risk be diversified away by investing in both UNIQA Insurance and British American 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 UNIQA Insurance and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNIQA Insurance Group and British American Tobacco, you can compare the effects of market volatilities on UNIQA Insurance and British American 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 UNIQA Insurance with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIQA Insurance and British American.
Diversification Opportunities for UNIQA Insurance and British American
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UNIQA and British is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding UNIQA Insurance Group and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and UNIQA Insurance 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 UNIQA Insurance Group are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of UNIQA Insurance i.e., UNIQA Insurance and British American go up and down completely randomly.
Pair Corralation between UNIQA Insurance and British American
Assuming the 90 days trading horizon UNIQA Insurance is expected to generate 1.5 times less return on investment than British American. But when comparing it to its historical volatility, UNIQA Insurance Group is 3.32 times less risky than British American. It trades about 0.05 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,423 in British American Tobacco on August 30, 2024 and sell it today you would earn a total of 380.00 from holding British American Tobacco or generate 11.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.59% |
| Values | Daily Returns |
UNIQA Insurance Group vs. British American Tobacco
Performance |
| Timeline |
| UNIQA Insurance Group |
| British American Tobacco |
UNIQA Insurance and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNIQA Insurance and British American
The main advantage of trading using opposite UNIQA Insurance and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIQA Insurance position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| UNIQA Insurance vs. Tungsten West PLC | UNIQA Insurance vs. Argo Group Limited | UNIQA Insurance vs. Hardide PLC | UNIQA Insurance vs. Versarien PLC |
| British American vs. Tungsten West PLC | British American vs. Argo Group Limited | British American vs. Hardide PLC | British American vs. Versarien 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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