Correlation Between British American and British American
Can any of the company-specific risk be diversified away by investing in both British American and British American 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 British American 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 British American Tobacco, you can compare the effects of market volatilities on British American and British American 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 British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and British American.
Diversification Opportunities for British American and British American
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between British and British is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of British American i.e., British American and British American go up and down completely randomly.
Pair Corralation between British American and British American
Assuming the 90 days horizon British American is expected to generate 1.29 times less return on investment than British American. But when comparing it to its historical volatility, British American Tobacco is 1.02 times less risky than British American. It trades about 0.01 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,441 in British American Tobacco on August 26, 2024 and sell it today you would earn a total of 139.00 from holding British American Tobacco or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. British American Tobacco
Performance |
| Timeline |
| British American Tobacco |
| British American Tobacco |
British American and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and British American
The main advantage of trading using opposite British American and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| British American vs. SIMS METAL MGT | British American vs. PARKEN Sport Entertainment | British American vs. Norwegian Air Shuttle | British American vs. CHINA TONTINE WINES |
| British American vs. Philip Morris International | British American vs. British American Tobacco | British American vs. British American Tobacco | British American vs. Altria Group |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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