Correlation Between InPlay Oil and British American
Can any of the company-specific risk be diversified away by investing in both InPlay Oil 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 InPlay Oil and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and British American Tobacco, you can compare the effects of market volatilities on InPlay Oil 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 InPlay Oil with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and British American.
Diversification Opportunities for InPlay Oil and British American
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between InPlay and British is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp 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 InPlay Oil 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 InPlay Oil Corp 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 InPlay Oil i.e., InPlay Oil and British American go up and down completely randomly.
Pair Corralation between InPlay Oil and British American
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the British American. In addition to that, InPlay Oil is 1.89 times more volatile than British American Tobacco. It trades about -0.02 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.03 per unit of volatility. If you would invest 3,070 in British American Tobacco on October 13, 2024 and sell it today you would earn a total of 470.00 from holding British American Tobacco or generate 15.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. British American Tobacco
Performance |
| Timeline |
| InPlay Oil Corp |
| British American Tobacco |
InPlay Oil and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and British American
The main advantage of trading using opposite InPlay Oil and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil 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.| InPlay Oil vs. Monster Beverage Corp | InPlay Oil vs. National Beverage Corp | InPlay Oil vs. BOSTON BEER A | InPlay Oil vs. Molson Coors Beverage |
| British American vs. InPlay Oil Corp | British American vs. PLAY2CHILL SA ZY | British American vs. Playa Hotels Resorts | British American vs. PLAYSTUDIOS A DL 0001 |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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