Correlation Between Associated British and Bankers Investment
Can any of the company-specific risk be diversified away by investing in both Associated British and Bankers Investment 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 Associated British and Bankers Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Bankers Investment Trust, you can compare the effects of market volatilities on Associated British and Bankers Investment 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 Associated British with a short position of Bankers Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Bankers Investment.
Diversification Opportunities for Associated British and Bankers Investment
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Associated and Bankers is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Bankers Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankers Investment Trust and Associated British 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 Associated British Foods are associated (or correlated) with Bankers Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankers Investment Trust has no effect on the direction of Associated British i.e., Associated British and Bankers Investment go up and down completely randomly.
Pair Corralation between Associated British and Bankers Investment
Assuming the 90 days trading horizon Associated British Foods is expected to under-perform the Bankers Investment. In addition to that, Associated British is 1.33 times more volatile than Bankers Investment Trust. It trades about -0.51 of its total potential returns per unit of risk. Bankers Investment Trust is currently generating about -0.01 per unit of volatility. If you would invest 11,620 in Bankers Investment Trust on October 13, 2024 and sell it today you would lose (20.00) from holding Bankers Investment Trust or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Bankers Investment Trust
Performance |
| Timeline |
| Associated British Foods |
| Bankers Investment Trust |
Associated British and Bankers Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Bankers Investment
The main advantage of trading using opposite Associated British and Bankers Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Bankers Investment 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 Bankers Investment will offset losses from the drop in Bankers Investment's long position.| Associated British vs. Wheaton Precious Metals | Associated British vs. Monster Beverage Corp | Associated British vs. European Metals Holdings | Associated British vs. Rheinmetall AG |
| Bankers Investment vs. Eneraqua Technologies PLC | Bankers Investment vs. Spotify Technology SA | Bankers Investment vs. Blackrock World Mining | Bankers Investment vs. Technicolor |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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