Correlation Between BRIT AMER and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both BRIT AMER and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical, you can compare the effects of market volatilities on BRIT AMER and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and Quaker Chemical.
Diversification Opportunities for BRIT AMER and Quaker Chemical
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BRIT and Quaker is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of BRIT AMER i.e., BRIT AMER and Quaker Chemical go up and down completely randomly.
Pair Corralation between BRIT AMER and Quaker Chemical
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 0.56 times more return on investment than Quaker Chemical. However, BRIT AMER TOBACCO is 1.78 times less risky than Quaker Chemical. It trades about 0.17 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.03 per unit of risk. If you would invest 2,770 in BRIT AMER TOBACCO on September 1, 2024 and sell it today you would earn a total of 821.00 from holding BRIT AMER TOBACCO or generate 29.64% 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. Quaker Chemical
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| Quaker Chemical |
BRIT AMER and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and Quaker Chemical
The main advantage of trading using opposite BRIT AMER and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| BRIT AMER vs. Enter Air SA | BRIT AMER vs. International Consolidated Airlines | BRIT AMER vs. FORWARD AIR P | BRIT AMER vs. Norwegian Air Shuttle |
| Quaker Chemical vs. Transport International Holdings | Quaker Chemical vs. TSOGO SUN GAMING | Quaker Chemical vs. Air Transport Services | Quaker Chemical vs. EVS Broadcast Equipment |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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