Correlation Between BAE Systems and Seychelle Environmtl
Can any of the company-specific risk be diversified away by investing in both BAE Systems and Seychelle Environmtl 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 BAE Systems and Seychelle Environmtl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BAE Systems PLC and Seychelle Environmtl, you can compare the effects of market volatilities on BAE Systems and Seychelle Environmtl 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 BAE Systems with a short position of Seychelle Environmtl. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAE Systems and Seychelle Environmtl.
Diversification Opportunities for BAE Systems and Seychelle Environmtl
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BAE and Seychelle is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding BAE Systems PLC and Seychelle Environmtl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seychelle Environmtl and BAE Systems 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 BAE Systems PLC are associated (or correlated) with Seychelle Environmtl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seychelle Environmtl has no effect on the direction of BAE Systems i.e., BAE Systems and Seychelle Environmtl go up and down completely randomly.
Pair Corralation between BAE Systems and Seychelle Environmtl
Assuming the 90 days horizon BAE Systems PLC is expected to generate 0.33 times more return on investment than Seychelle Environmtl. However, BAE Systems PLC is 3.07 times less risky than Seychelle Environmtl. It trades about -0.06 of its potential returns per unit of risk. Seychelle Environmtl is currently generating about -0.3 per unit of risk. If you would invest 6,455 in BAE Systems PLC on September 3, 2024 and sell it today you would lose (211.00) from holding BAE Systems PLC or give up 3.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
BAE Systems PLC vs. Seychelle Environmtl
Performance |
| Timeline |
| BAE Systems PLC |
| Seychelle Environmtl |
BAE Systems and Seychelle Environmtl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BAE Systems and Seychelle Environmtl
The main advantage of trading using opposite BAE Systems and Seychelle Environmtl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAE Systems position performs unexpectedly, Seychelle Environmtl 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 Seychelle Environmtl will offset losses from the drop in Seychelle Environmtl's long position.| BAE Systems vs. Leonardo Spa | BAE Systems vs. QinetiQ Group plc | BAE Systems vs. Leonardo SpA ADR | BAE Systems vs. Huntington Ingalls Industries |
| Seychelle Environmtl vs. Eestech | Seychelle Environmtl vs. Energy and Water | Seychelle Environmtl vs. One World Universe | Seychelle Environmtl vs. Bion Environmental Technologies |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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