Correlation Between BRIT AMER and Caseys General
Can any of the company-specific risk be diversified away by investing in both BRIT AMER and Caseys General 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 Caseys General 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 Caseys General Stores, you can compare the effects of market volatilities on BRIT AMER and Caseys General 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 Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and Caseys General.
Diversification Opportunities for BRIT AMER and Caseys General
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BRIT and Caseys is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores 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 Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of BRIT AMER i.e., BRIT AMER and Caseys General go up and down completely randomly.
Pair Corralation between BRIT AMER and Caseys General
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 1.32 times more return on investment than Caseys General. However, BRIT AMER is 1.32 times more volatile than Caseys General Stores. It trades about -0.14 of its potential returns per unit of risk. Caseys General Stores is currently generating about -0.37 per unit of risk. If you would invest 3,987 in BRIT AMER TOBACCO on December 8, 2024 and sell it today you would lose (277.00) from holding BRIT AMER TOBACCO or give up 6.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. Caseys General Stores
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| Caseys General Stores |
BRIT AMER and Caseys General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and Caseys General
The main advantage of trading using opposite BRIT AMER and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER position performs unexpectedly, Caseys General 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 Caseys General will offset losses from the drop in Caseys General's long position.| BRIT AMER vs. JAPAN TOBACCO UNSPADR12 | ||
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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