Correlation Between British American and TE NECTIV
Can any of the company-specific risk be diversified away by investing in both British American and TE NECTIV 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 TE NECTIV 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 TE NECTIV N, you can compare the effects of market volatilities on British American and TE NECTIV 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 TE NECTIV. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and TE NECTIV.
Diversification Opportunities for British American and TE NECTIV
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between British and 9TC is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and TE NECTIV N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TE NECTIV N 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 TE NECTIV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TE NECTIV N has no effect on the direction of British American i.e., British American and TE NECTIV go up and down completely randomly.
Pair Corralation between British American and TE NECTIV
Assuming the 90 days trading horizon British American is expected to generate 10.54 times less return on investment than TE NECTIV. But when comparing it to its historical volatility, British American Tobacco is 2.44 times less risky than TE NECTIV. It trades about 0.01 of its potential returns per unit of risk. TE NECTIV N is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,901 in TE NECTIV N on August 27, 2024 and sell it today you would earn a total of 6,405 from holding TE NECTIV N or generate 81.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. TE NECTIV N
Performance |
| Timeline |
| British American Tobacco |
| TE NECTIV N |
British American and TE NECTIV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and TE NECTIV
The main advantage of trading using opposite British American and TE NECTIV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, TE NECTIV 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 TE NECTIV will offset losses from the drop in TE NECTIV's long position.| British American vs. Philip Morris International | British American vs. British American Tobacco | British American vs. British American Tobacco | British American vs. Altria Group |
| TE NECTIV vs. MCEWEN MINING INC | TE NECTIV vs. British American Tobacco | TE NECTIV vs. Scandinavian Tobacco Group | TE NECTIV vs. InPlay Oil Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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