Correlation Between BRITISH AMERICAN and DIAMOND TRUST
Can any of the company-specific risk be diversified away by investing in both BRITISH AMERICAN and DIAMOND TRUST 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 DIAMOND TRUST 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 DIAMOND TRUST BANK, you can compare the effects of market volatilities on BRITISH AMERICAN and DIAMOND TRUST 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 DIAMOND TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRITISH AMERICAN and DIAMOND TRUST.
Diversification Opportunities for BRITISH AMERICAN and DIAMOND TRUST
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BRITISH and DIAMOND is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BRITISH AMERICAN TOBACCO and DIAMOND TRUST BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIAMOND TRUST BANK 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 DIAMOND TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIAMOND TRUST BANK has no effect on the direction of BRITISH AMERICAN i.e., BRITISH AMERICAN and DIAMOND TRUST go up and down completely randomly.
Pair Corralation between BRITISH AMERICAN and DIAMOND TRUST
Assuming the 90 days trading horizon BRITISH AMERICAN is expected to generate 32.07 times less return on investment than DIAMOND TRUST. But when comparing it to its historical volatility, BRITISH AMERICAN TOBACCO is 1.49 times less risky than DIAMOND TRUST. It trades about 0.0 of its potential returns per unit of risk. DIAMOND TRUST BANK is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,300 in DIAMOND TRUST BANK on September 2, 2024 and sell it today you would earn a total of 50.00 from holding DIAMOND TRUST BANK or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRITISH AMERICAN TOBACCO vs. DIAMOND TRUST BANK
Performance |
| Timeline |
| BRITISH AMERICAN TOBACCO |
| DIAMOND TRUST BANK |
BRITISH AMERICAN and DIAMOND TRUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRITISH AMERICAN and DIAMOND TRUST
The main advantage of trading using opposite BRITISH AMERICAN and DIAMOND TRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRITISH AMERICAN position performs unexpectedly, DIAMOND TRUST 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 DIAMOND TRUST will offset losses from the drop in DIAMOND TRUST's long position.| BRITISH AMERICAN vs. HOME AFRIKA LTD | BRITISH AMERICAN vs. ABSA BANK OF | BRITISH AMERICAN vs. CO OPERATIVE BANK OF | BRITISH AMERICAN vs. CENTUM INVESTMENT PANY |
| DIAMOND TRUST vs. TOTALENERGIES MARKETING KENYA | DIAMOND TRUST vs. HOMEBOYZ ENTERTAINMENT PLC | DIAMOND TRUST vs. BRITISH AMERICAN TOBACCO | DIAMOND TRUST vs. HOME AFRIKA LTD |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |