Correlation Between British American and Superior Plus
Can any of the company-specific risk be diversified away by investing in both British American and Superior Plus 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 Superior Plus 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 Superior Plus Corp, you can compare the effects of market volatilities on British American and Superior Plus 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 Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Superior Plus.
Diversification Opportunities for British American and Superior Plus
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between British and Superior is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp 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 Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of British American i.e., British American and Superior Plus go up and down completely randomly.
Pair Corralation between British American and Superior Plus
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.38 times more return on investment than Superior Plus. However, British American Tobacco is 2.63 times less risky than Superior Plus. It trades about 0.2 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.07 per unit of risk. If you would invest 2,767 in British American Tobacco on September 1, 2024 and sell it today you would earn a total of 828.00 from holding British American Tobacco or generate 29.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Superior Plus Corp
Performance |
| Timeline |
| British American Tobacco |
| Superior Plus Corp |
British American and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Superior Plus
The main advantage of trading using opposite British American and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| British American vs. Air Transport Services | British American vs. Corporate Office Properties | British American vs. Columbia Sportswear | British American vs. Ming Le Sports |
| Superior Plus vs. TSOGO SUN GAMING | Superior Plus vs. FUTURE GAMING GRP | Superior Plus vs. TROPHY GAMES DEV | Superior Plus vs. Boyd Gaming |
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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