Correlation Between British American and MEDICAL FACILITIES
Can any of the company-specific risk be diversified away by investing in both British American and MEDICAL FACILITIES 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 British American and MEDICAL FACILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and MEDICAL FACILITIES NEW, you can compare the effects of market volatilities on British American and MEDICAL FACILITIES 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 British American with a short position of MEDICAL FACILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and MEDICAL FACILITIES.
Diversification Opportunities for British American and MEDICAL FACILITIES
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between British and MEDICAL is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and MEDICAL FACILITIES NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDICAL FACILITIES NEW and British American 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 British American Tobacco are associated (or correlated) with MEDICAL FACILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDICAL FACILITIES NEW has no effect on the direction of British American i.e., British American and MEDICAL FACILITIES go up and down completely randomly.
Pair Corralation between British American and MEDICAL FACILITIES
Assuming the 90 days trading horizon British American is expected to generate 1.17 times less return on investment than MEDICAL FACILITIES. But when comparing it to its historical volatility, British American Tobacco is 1.81 times less risky than MEDICAL FACILITIES. It trades about 0.14 of its potential returns per unit of risk. MEDICAL FACILITIES NEW is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 927.00 in MEDICAL FACILITIES NEW on November 2, 2024 and sell it today you would earn a total of 153.00 from holding MEDICAL FACILITIES NEW or generate 16.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. MEDICAL FACILITIES NEW
Performance |
| Timeline |
| British American Tobacco |
| MEDICAL FACILITIES NEW |
British American and MEDICAL FACILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and MEDICAL FACILITIES
The main advantage of trading using opposite British American and MEDICAL FACILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, MEDICAL FACILITIES 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 MEDICAL FACILITIES will offset losses from the drop in MEDICAL FACILITIES's long position.| British American vs. Air Transport Services | British American vs. Aluminum of | British American vs. Apollo Investment Corp | British American vs. FIREWEED METALS P |
| MEDICAL FACILITIES vs. De Grey Mining | MEDICAL FACILITIES vs. Federal Agricultural Mortgage | MEDICAL FACILITIES vs. Penta Ocean Construction Co | MEDICAL FACILITIES vs. MCEWEN MINING INC |
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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