Correlation Between BRIT AMER and STORE ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both BRIT AMER and STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC, you can compare the effects of market volatilities on BRIT AMER and STORE ELECTRONIC 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 STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and STORE ELECTRONIC.
Diversification Opportunities for BRIT AMER and STORE ELECTRONIC
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between BRIT and STORE is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of BRIT AMER i.e., BRIT AMER and STORE ELECTRONIC go up and down completely randomly.
Pair Corralation between BRIT AMER and STORE ELECTRONIC
Assuming the 90 days trading horizon BRIT AMER is expected to generate 5.97 times less return on investment than STORE ELECTRONIC. But when comparing it to its historical volatility, BRIT AMER TOBACCO is 3.96 times less risky than STORE ELECTRONIC. It trades about 0.02 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 12,751 in STORE ELECTRONIC on September 4, 2024 and sell it today you would earn a total of 1,329 from holding STORE ELECTRONIC or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. STORE ELECTRONIC
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| STORE ELECTRONIC |
BRIT AMER and STORE ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and STORE ELECTRONIC
The main advantage of trading using opposite BRIT AMER and STORE ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER position performs unexpectedly, STORE ELECTRONIC 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 STORE ELECTRONIC will offset losses from the drop in STORE ELECTRONIC's long position.| BRIT AMER vs. Thai Beverage Public | BRIT AMER vs. ITALIAN WINE BRANDS | BRIT AMER vs. VIVA WINE GROUP | BRIT AMER vs. National Retail Properties |
| STORE ELECTRONIC vs. TOTAL GABON | STORE ELECTRONIC vs. Walgreens Boots Alliance | STORE ELECTRONIC vs. Peak Resources Limited |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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