Correlation Between BRIT AMER and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both BRIT AMER and CarsalesCom 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 CarsalesCom 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 CarsalesCom, you can compare the effects of market volatilities on BRIT AMER and CarsalesCom 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 CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and CarsalesCom.
Diversification Opportunities for BRIT AMER and CarsalesCom
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BRIT and CarsalesCom is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of BRIT AMER i.e., BRIT AMER and CarsalesCom go up and down completely randomly.
Pair Corralation between BRIT AMER and CarsalesCom
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 1.05 times more return on investment than CarsalesCom. However, BRIT AMER is 1.05 times more volatile than CarsalesCom. It trades about 0.28 of its potential returns per unit of risk. CarsalesCom is currently generating about 0.06 per unit of risk. If you would invest 3,316 in BRIT AMER TOBACCO on September 12, 2024 and sell it today you would earn a total of 283.00 from holding BRIT AMER TOBACCO or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. CarsalesCom
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| CarsalesCom |
BRIT AMER and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and CarsalesCom
The main advantage of trading using opposite BRIT AMER and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom's long position.| BRIT AMER vs. PLAYMATES TOYS | BRIT AMER vs. TSOGO SUN GAMING | BRIT AMER vs. COFCO Joycome Foods | BRIT AMER vs. GigaMedia |
| CarsalesCom vs. Tencent Holdings | CarsalesCom vs. Superior Plus Corp | CarsalesCom vs. SIVERS SEMICONDUCTORS AB | CarsalesCom vs. NorAm Drilling AS |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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