Correlation Between BRIT AMER and PANDORA
Can any of the company-specific risk be diversified away by investing in both BRIT AMER and PANDORA 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 BRIT AMER and PANDORA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIT AMER TOBACCO and PANDORA, you can compare the effects of market volatilities on BRIT AMER and PANDORA 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 BRIT AMER with a short position of PANDORA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and PANDORA.
Diversification Opportunities for BRIT AMER and PANDORA
Very weak diversification
The 3 months correlation between BRIT and PANDORA is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and PANDORA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PANDORA and BRIT AMER 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 BRIT AMER TOBACCO are associated (or correlated) with PANDORA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PANDORA has no effect on the direction of BRIT AMER i.e., BRIT AMER and PANDORA go up and down completely randomly.
Pair Corralation between BRIT AMER and PANDORA
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 0.76 times more return on investment than PANDORA. However, BRIT AMER TOBACCO is 1.31 times less risky than PANDORA. It trades about 0.13 of its potential returns per unit of risk. PANDORA is currently generating about 0.06 per unit of risk. If you would invest 2,552 in BRIT AMER TOBACCO on December 4, 2024 and sell it today you would earn a total of 1,221 from holding BRIT AMER TOBACCO or generate 47.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. PANDORA
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| PANDORA |
BRIT AMER and PANDORA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and PANDORA
The main advantage of trading using opposite BRIT AMER and PANDORA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER position performs unexpectedly, PANDORA 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 PANDORA will offset losses from the drop in PANDORA's long position.| BRIT AMER vs. EITZEN CHEMICALS | BRIT AMER vs. TIANDE CHEMICAL | BRIT AMER vs. X FAB Silicon Foundries | BRIT AMER vs. COMPUTER MODELLING |
| PANDORA vs. Hyster Yale Materials Handling | PANDORA vs. DATAGROUP SE | PANDORA vs. Information Services International Dentsu | PANDORA vs. Data Modul AG |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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