Correlation Between British American and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both British American and ArcelorMittal 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 British American and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and ArcelorMittal SA, you can compare the effects of market volatilities on British American and ArcelorMittal 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 British American with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and ArcelorMittal.
Diversification Opportunities for British American and ArcelorMittal
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between British and ArcelorMittal is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA and British American 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 British American Tobacco are associated (or correlated) with ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA has no effect on the direction of British American i.e., British American and ArcelorMittal go up and down completely randomly.
Pair Corralation between British American and ArcelorMittal
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.41 times more return on investment than ArcelorMittal. However, British American Tobacco is 2.46 times less risky than ArcelorMittal. It trades about 0.58 of its potential returns per unit of risk. ArcelorMittal SA is currently generating about 0.12 per unit of risk. If you would invest 4,061 in British American Tobacco on September 12, 2024 and sell it today you would earn a total of 499.00 from holding British American Tobacco or generate 12.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
British American Tobacco vs. ArcelorMittal SA
Performance |
| Timeline |
| British American Tobacco |
| ArcelorMittal SA |
British American and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and ArcelorMittal
The main advantage of trading using opposite British American and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.| British American vs. Fundo Investimento Imobiliario | British American vs. LESTE FDO INV | British American vs. Fras le SA | British American vs. Western Digital |
| ArcelorMittal vs. Uber Technologies | ArcelorMittal vs. GX AI TECH | ArcelorMittal vs. British American Tobacco | ArcelorMittal vs. Lupatech SA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |