Correlation Between BRIT AMER and Tesla
Can any of the company-specific risk be diversified away by investing in both BRIT AMER and Tesla 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 Tesla 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 Tesla Inc, you can compare the effects of market volatilities on BRIT AMER and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and Tesla.
Diversification Opportunities for BRIT AMER and Tesla
Very poor diversification
The 3 months correlation between BRIT and Tesla is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of BRIT AMER i.e., BRIT AMER and Tesla go up and down completely randomly.
Pair Corralation between BRIT AMER and Tesla
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 0.34 times more return on investment than Tesla. However, BRIT AMER TOBACCO is 2.97 times less risky than Tesla. It trades about 0.07 of its potential returns per unit of risk. Tesla Inc is currently generating about -0.05 per unit of risk. If you would invest 3,455 in BRIT AMER TOBACCO on October 24, 2024 and sell it today you would earn a total of 40.00 from holding BRIT AMER TOBACCO or generate 1.16% 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. Tesla Inc
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| Tesla Inc |
BRIT AMER and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and Tesla
The main advantage of trading using opposite BRIT AMER and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.| BRIT AMER vs. OFFICE DEPOT | BRIT AMER vs. Focus Home Interactive | BRIT AMER vs. QBE Insurance Group | BRIT AMER vs. Haier Smart Home |
| Tesla vs. GREENX METALS LTD | Tesla vs. Calibre Mining Corp | Tesla vs. Perseus Mining Limited | Tesla vs. TT Electronics PLC |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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