Correlation Between British American and Livetech
Can any of the company-specific risk be diversified away by investing in both British American and Livetech 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 Livetech 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 Livetech da Bahia, you can compare the effects of market volatilities on British American and Livetech 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 Livetech. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Livetech.
Diversification Opportunities for British American and Livetech
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between British and Livetech is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Livetech da Bahia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livetech da Bahia 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 Livetech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livetech da Bahia has no effect on the direction of British American i.e., British American and Livetech go up and down completely randomly.
Pair Corralation between British American and Livetech
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.65 times more return on investment than Livetech. However, British American Tobacco is 1.55 times less risky than Livetech. It trades about 0.32 of its potential returns per unit of risk. Livetech da Bahia is currently generating about -0.69 per unit of risk. If you would invest 4,223 in British American Tobacco on September 19, 2024 and sell it today you would earn a total of 317.00 from holding British American Tobacco or generate 7.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Livetech da Bahia
Performance |
| Timeline |
| British American Tobacco |
| Livetech da Bahia |
British American and Livetech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Livetech
The main advantage of trading using opposite British American and Livetech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Livetech 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 Livetech will offset losses from the drop in Livetech's long position.| British American vs. Costco Wholesale | British American vs. Micron Technology | British American vs. GX AI TECH | British American vs. Agilent Technologies |
| Livetech vs. T Mobile | Livetech vs. Verizon Communications | Livetech vs. Vodafone Group Public | Livetech vs. Fundo Investimento Imobiliario |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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