Correlation Between BRITISH AMERICAN and WPP SCANGROUP
Can any of the company-specific risk be diversified away by investing in both BRITISH AMERICAN and WPP SCANGROUP 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 WPP SCANGROUP 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 WPP SCANGROUP PLC, you can compare the effects of market volatilities on BRITISH AMERICAN and WPP SCANGROUP 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 WPP SCANGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRITISH AMERICAN and WPP SCANGROUP.
Diversification Opportunities for BRITISH AMERICAN and WPP SCANGROUP
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BRITISH and WPP is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BRITISH AMERICAN TOBACCO and WPP SCANGROUP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP SCANGROUP PLC 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 WPP SCANGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPP SCANGROUP PLC has no effect on the direction of BRITISH AMERICAN i.e., BRITISH AMERICAN and WPP SCANGROUP go up and down completely randomly.
Pair Corralation between BRITISH AMERICAN and WPP SCANGROUP
Assuming the 90 days trading horizon BRITISH AMERICAN TOBACCO is expected to generate 0.28 times more return on investment than WPP SCANGROUP. However, BRITISH AMERICAN TOBACCO is 3.52 times less risky than WPP SCANGROUP. It trades about 0.02 of its potential returns per unit of risk. WPP SCANGROUP PLC is currently generating about 0.01 per unit of risk. If you would invest 34,900 in BRITISH AMERICAN TOBACCO on August 24, 2024 and sell it today you would earn a total of 150.00 from holding BRITISH AMERICAN TOBACCO or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRITISH AMERICAN TOBACCO vs. WPP SCANGROUP PLC
Performance |
| Timeline |
| BRITISH AMERICAN TOBACCO |
| WPP SCANGROUP PLC |
BRITISH AMERICAN and WPP SCANGROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRITISH AMERICAN and WPP SCANGROUP
The main advantage of trading using opposite BRITISH AMERICAN and WPP SCANGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRITISH AMERICAN position performs unexpectedly, WPP SCANGROUP 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 WPP SCANGROUP will offset losses from the drop in WPP SCANGROUP's long position.| BRITISH AMERICAN vs. CARBACID INVESTMENTS LTD | BRITISH AMERICAN vs. HOMEBOYZ ENTERTAINMENT PLC | BRITISH AMERICAN vs. HOME AFRIKA LTD | BRITISH AMERICAN vs. CO OPERATIVE BANK OF |
| WPP SCANGROUP vs. STANDARD CHARTERED BANK | WPP SCANGROUP vs. KENYA RE INSURANCE PORATION | WPP SCANGROUP vs. TOTALENERGIES MARKETING KENYA | WPP SCANGROUP vs. BRITISH AMERICAN TOBACCO |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |