Correlation Between British American and Unity Software
Can any of the company-specific risk be diversified away by investing in both British American and Unity Software 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 Unity Software 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 Unity Software, you can compare the effects of market volatilities on British American and Unity Software 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 Unity Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Unity Software.
Diversification Opportunities for British American and Unity Software
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between British and Unity is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software 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 Unity Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Software has no effect on the direction of British American i.e., British American and Unity Software go up and down completely randomly.
Pair Corralation between British American and Unity Software
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.4 times more return on investment than Unity Software. However, British American Tobacco is 2.48 times less risky than Unity Software. It trades about 0.05 of its potential returns per unit of risk. Unity Software is currently generating about 0.02 per unit of risk. If you would invest 3,076 in British American Tobacco on November 27, 2024 and sell it today you would earn a total of 1,326 from holding British American Tobacco or generate 43.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Unity Software
Performance |
| Timeline |
| British American Tobacco |
| Unity Software |
British American and Unity Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Unity Software
The main advantage of trading using opposite British American and Unity Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Unity Software 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 Unity Software will offset losses from the drop in Unity Software's long position.| British American vs. GP Investments | British American vs. Broadridge Financial Solutions, | British American vs. Fair Isaac | British American vs. CVS Health |
| Unity Software vs. Microchip Technology Incorporated | Unity Software vs. Deutsche Bank Aktiengesellschaft | Unity Software vs. Sumitomo Mitsui Financial | Unity Software vs. JB Hunt Transport |
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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