Correlation Between BRITISH AMERICAN and Morgan Co
Can any of the company-specific risk be diversified away by investing in both BRITISH AMERICAN and Morgan Co 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 Morgan Co 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 Morgan Co Multi, you can compare the effects of market volatilities on BRITISH AMERICAN and Morgan Co 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 Morgan Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRITISH AMERICAN and Morgan Co.
Diversification Opportunities for BRITISH AMERICAN and Morgan Co
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BRITISH and Morgan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding BRITISH AMERICAN TOBACCO and Morgan Co Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Co Multi 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 Morgan Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Co Multi has no effect on the direction of BRITISH AMERICAN i.e., BRITISH AMERICAN and Morgan Co go up and down completely randomly.
Pair Corralation between BRITISH AMERICAN and Morgan Co
Assuming the 90 days trading horizon BRITISH AMERICAN TOBACCO is expected to generate 2.92 times more return on investment than Morgan Co. However, BRITISH AMERICAN is 2.92 times more volatile than Morgan Co Multi. It trades about -0.02 of its potential returns per unit of risk. Morgan Co Multi is currently generating about -0.07 per unit of risk. If you would invest 1,199,995 in BRITISH AMERICAN TOBACCO on November 6, 2024 and sell it today you would lose (209,995) from holding BRITISH AMERICAN TOBACCO or give up 17.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
BRITISH AMERICAN TOBACCO vs. Morgan Co Multi
Performance |
| Timeline |
| BRITISH AMERICAN TOBACCO |
| Morgan Co Multi |
BRITISH AMERICAN and Morgan Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRITISH AMERICAN and Morgan Co
The main advantage of trading using opposite BRITISH AMERICAN and Morgan Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRITISH AMERICAN position performs unexpectedly, Morgan Co 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 Morgan Co will offset losses from the drop in Morgan Co's long position.| BRITISH AMERICAN vs. STAR AFRICA PORATION | BRITISH AMERICAN vs. CAFCA LIMITED | BRITISH AMERICAN vs. FIRST MUTUAL PROPERTIES | BRITISH AMERICAN vs. AFRICAN DISTILLERS LIMITED |
| Morgan Co vs. Morgan Co Made | Morgan Co vs. STAR AFRICA PORATION | Morgan Co vs. CAFCA LIMITED | Morgan Co vs. FIRST MUTUAL PROPERTIES |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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