Correlation Between British American and METISA Metalrgica
Can any of the company-specific risk be diversified away by investing in both British American and METISA Metalrgica 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 METISA Metalrgica 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 METISA Metalrgica Timboense, you can compare the effects of market volatilities on British American and METISA Metalrgica 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 METISA Metalrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and METISA Metalrgica.
Diversification Opportunities for British American and METISA Metalrgica
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between British and METISA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica 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 METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of British American i.e., British American and METISA Metalrgica go up and down completely randomly.
Pair Corralation between British American and METISA Metalrgica
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.45 times more return on investment than METISA Metalrgica. However, British American Tobacco is 2.24 times less risky than METISA Metalrgica. It trades about 0.48 of its potential returns per unit of risk. METISA Metalrgica Timboense is currently generating about -0.04 per unit of risk. If you would invest 3,957 in British American Tobacco on August 26, 2024 and sell it today you would earn a total of 395.00 from holding British American Tobacco or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. METISA Metalrgica Timboense
Performance |
| Timeline |
| British American Tobacco |
| METISA Metalrgica |
British American and METISA Metalrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and METISA Metalrgica
The main advantage of trading using opposite British American and METISA Metalrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, METISA Metalrgica 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 METISA Metalrgica will offset losses from the drop in METISA Metalrgica's long position.| British American vs. Fras le SA | British American vs. Clave Indices De | British American vs. BTG Pactual Logstica | British American vs. Telefonaktiebolaget LM Ericsson |
| METISA Metalrgica vs. Schulz SA | METISA Metalrgica vs. Fras le SA | METISA Metalrgica vs. PBG SA | METISA Metalrgica vs. Springs Global Participaes |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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