Correlation Between BRIT AMER and Element Solutions
Can any of the company-specific risk be diversified away by investing in both BRIT AMER and Element Solutions 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 Element Solutions 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 Element Solutions, you can compare the effects of market volatilities on BRIT AMER and Element Solutions 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 Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and Element Solutions.
Diversification Opportunities for BRIT AMER and Element Solutions
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BRIT and Element is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions 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 Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of BRIT AMER i.e., BRIT AMER and Element Solutions go up and down completely randomly.
Pair Corralation between BRIT AMER and Element Solutions
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 0.68 times more return on investment than Element Solutions. However, BRIT AMER TOBACCO is 1.48 times less risky than Element Solutions. It trades about 0.02 of its potential returns per unit of risk. Element Solutions is currently generating about -0.09 per unit of risk. If you would invest 3,560 in BRIT AMER TOBACCO on September 19, 2024 and sell it today you would earn a total of 9.00 from holding BRIT AMER TOBACCO or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. Element Solutions
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| Element Solutions |
BRIT AMER and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and Element Solutions
The main advantage of trading using opposite BRIT AMER and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| BRIT AMER vs. SEI INVESTMENTS | BRIT AMER vs. ALTAIR RES INC | BRIT AMER vs. MYFAIR GOLD P | BRIT AMER vs. SOGECLAIR SA INH |
| Element Solutions vs. Tsingtao Brewery | Element Solutions vs. China Resources Beer | Element Solutions vs. ScanSource | Element Solutions vs. BRIT AMER 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |