Correlation Between Cellnex Telecom and British American
Can any of the company-specific risk be diversified away by investing in both Cellnex Telecom 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 Cellnex Telecom and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cellnex Telecom SA and British American Tobacco, you can compare the effects of market volatilities on Cellnex Telecom 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 Cellnex Telecom with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cellnex Telecom and British American.
Diversification Opportunities for Cellnex Telecom and British American
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cellnex and British is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA 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 Cellnex Telecom 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 Cellnex Telecom SA 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 Cellnex Telecom i.e., Cellnex Telecom and British American go up and down completely randomly.
Pair Corralation between Cellnex Telecom and British American
Assuming the 90 days trading horizon Cellnex Telecom SA is expected to under-perform the British American. In addition to that, Cellnex Telecom is 1.05 times more volatile than British American Tobacco. It trades about -0.29 of its total potential returns per unit of risk. British American Tobacco is currently generating about -0.05 per unit of volatility. If you would invest 3,653 in British American Tobacco on September 26, 2024 and sell it today you would lose (54.00) from holding British American Tobacco or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cellnex Telecom SA vs. British American Tobacco
Performance |
| Timeline |
| Cellnex Telecom SA |
| British American Tobacco |
Cellnex Telecom and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cellnex Telecom and British American
The main advantage of trading using opposite Cellnex Telecom and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cellnex Telecom 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.| Cellnex Telecom vs. Uniper SE | Cellnex Telecom vs. Mulberry Group PLC | Cellnex Telecom vs. London Security Plc | Cellnex Telecom vs. Triad Group PLC |
| British American vs. Uniper SE | British American vs. Mulberry Group PLC | British American vs. London Security Plc | British American vs. Triad Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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