Correlation Between Alupar Investimento and British American
Can any of the company-specific risk be diversified away by investing in both Alupar Investimento 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 Alupar Investimento and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alupar Investimento SA and British American Tobacco, you can compare the effects of market volatilities on Alupar Investimento 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 Alupar Investimento with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alupar Investimento and British American.
Diversification Opportunities for Alupar Investimento and British American
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alupar and British is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Alupar Investimento 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 Alupar Investimento 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 Alupar Investimento 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 Alupar Investimento i.e., Alupar Investimento and British American go up and down completely randomly.
Pair Corralation between Alupar Investimento and British American
Assuming the 90 days trading horizon Alupar Investimento SA is expected to under-perform the British American. In addition to that, Alupar Investimento is 1.35 times more volatile than British American Tobacco. It trades about -0.06 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.49 per unit of volatility. If you would invest 4,047 in British American Tobacco on September 13, 2024 and sell it today you would earn a total of 448.00 from holding British American Tobacco or generate 11.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Alupar Investimento SA vs. British American Tobacco
Performance |
| Timeline |
| Alupar Investimento |
| British American Tobacco |
Alupar Investimento and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alupar Investimento and British American
The main advantage of trading using opposite Alupar Investimento and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alupar Investimento 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.| Alupar Investimento vs. Duke Energy | Alupar Investimento vs. Centrais Eltricas Brasileiras | Alupar Investimento vs. Centrais Eltricas Brasileiras | Alupar Investimento vs. Energisa SA |
| British American vs. Fundo Investimento Imobiliario | British American vs. LESTE FDO INV | British American vs. Fras le SA | British American vs. Western Digital |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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