Correlation Between PLAYMATES TOYS and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both PLAYMATES TOYS and BRIT AMER 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 PLAYMATES TOYS and BRIT AMER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLAYMATES TOYS and BRIT AMER TOBACCO, you can compare the effects of market volatilities on PLAYMATES TOYS and BRIT AMER 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 PLAYMATES TOYS with a short position of BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYMATES TOYS and BRIT AMER.
Diversification Opportunities for PLAYMATES TOYS and BRIT AMER
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PLAYMATES and BRIT is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO and PLAYMATES TOYS 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 PLAYMATES TOYS are associated (or correlated) with BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of PLAYMATES TOYS i.e., PLAYMATES TOYS and BRIT AMER go up and down completely randomly.
Pair Corralation between PLAYMATES TOYS and BRIT AMER
Assuming the 90 days trading horizon PLAYMATES TOYS is expected to under-perform the BRIT AMER. In addition to that, PLAYMATES TOYS is 2.05 times more volatile than BRIT AMER TOBACCO. It trades about -0.06 of its total potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.28 per unit of volatility. If you would invest 3,300 in BRIT AMER TOBACCO on September 13, 2024 and sell it today you would earn a total of 281.00 from holding BRIT AMER TOBACCO or generate 8.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLAYMATES TOYS vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| PLAYMATES TOYS |
| BRIT AMER TOBACCO |
PLAYMATES TOYS and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLAYMATES TOYS and BRIT AMER
The main advantage of trading using opposite PLAYMATES TOYS and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYMATES TOYS position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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