Correlation Between BRIT AMER and CANON MARKETING
Can any of the company-specific risk be diversified away by investing in both BRIT AMER and CANON MARKETING 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 CANON MARKETING 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 CANON MARKETING JP, you can compare the effects of market volatilities on BRIT AMER and CANON MARKETING 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 CANON MARKETING. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and CANON MARKETING.
Diversification Opportunities for BRIT AMER and CANON MARKETING
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BRIT and CANON is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and CANON MARKETING JP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANON MARKETING JP 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 CANON MARKETING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANON MARKETING JP has no effect on the direction of BRIT AMER i.e., BRIT AMER and CANON MARKETING go up and down completely randomly.
Pair Corralation between BRIT AMER and CANON MARKETING
Assuming the 90 days trading horizon BRIT AMER is expected to generate 1.05 times less return on investment than CANON MARKETING. But when comparing it to its historical volatility, BRIT AMER TOBACCO is 1.29 times less risky than CANON MARKETING. It trades about 0.16 of its potential returns per unit of risk. CANON MARKETING JP is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,520 in CANON MARKETING JP on November 3, 2024 and sell it today you would earn a total of 660.00 from holding CANON MARKETING JP or generate 26.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. CANON MARKETING JP
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| CANON MARKETING JP |
BRIT AMER and CANON MARKETING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and CANON MARKETING
The main advantage of trading using opposite BRIT AMER and CANON MARKETING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER position performs unexpectedly, CANON MARKETING 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 CANON MARKETING will offset losses from the drop in CANON MARKETING's long position.| BRIT AMER vs. Caseys General Stores | BRIT AMER vs. Gaztransport Technigaz SA | BRIT AMER vs. TEXAS ROADHOUSE | BRIT AMER vs. SAFEROADS HLDGS |
| CANON MARKETING vs. Goosehead Insurance | CANON MARKETING vs. Vienna Insurance Group | CANON MARKETING vs. HAVERTY FURNITURE A | CANON MARKETING vs. OFFICE DEPOT |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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