Correlation Between PLAYMATES TOYS and British American
Can any of the company-specific risk be diversified away by investing in both PLAYMATES TOYS 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 PLAYMATES TOYS and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLAYMATES TOYS and British American Tobacco, you can compare the effects of market volatilities on PLAYMATES TOYS 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 PLAYMATES TOYS with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYMATES TOYS and British American.
Diversification Opportunities for PLAYMATES TOYS and British American
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PLAYMATES and British is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS 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 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 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 PLAYMATES TOYS i.e., PLAYMATES TOYS and British American go up and down completely randomly.
Pair Corralation between PLAYMATES TOYS and British American
Assuming the 90 days trading horizon PLAYMATES TOYS is expected to generate 6.12 times more return on investment than British American. However, PLAYMATES TOYS is 6.12 times more volatile than British American Tobacco. It trades about 0.07 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.15 per unit of risk. If you would invest 4.67 in PLAYMATES TOYS on September 22, 2024 and sell it today you would earn a total of 2.13 from holding PLAYMATES TOYS or generate 45.61% 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. British American Tobacco
Performance |
| Timeline |
| PLAYMATES TOYS |
| British American Tobacco |
PLAYMATES TOYS and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLAYMATES TOYS and British American
The main advantage of trading using opposite PLAYMATES TOYS and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYMATES TOYS 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.| PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc |
| British American vs. COLUMBIA SPORTSWEAR | British American vs. Universal Display | British American vs. SINGAPORE AIRLINES | British American vs. PLAYMATES TOYS |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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