Correlation Between British American and Canon Marketing
Can any of the company-specific risk be diversified away by investing in both British American and Canon Marketing 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 Canon Marketing 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 Canon Marketing Japan, you can compare the effects of market volatilities on British American and Canon Marketing 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 Canon Marketing. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Canon Marketing.
Diversification Opportunities for British American and Canon Marketing
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between British and Canon is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Canon Marketing Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Marketing Japan 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 Canon Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Marketing Japan has no effect on the direction of British American i.e., British American and Canon Marketing go up and down completely randomly.
Pair Corralation between British American and Canon Marketing
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.64 times more return on investment than Canon Marketing. However, British American Tobacco is 1.57 times less risky than Canon Marketing. It trades about 0.16 of its potential returns per unit of risk. Canon Marketing Japan is currently generating about 0.05 per unit of risk. If you would invest 2,539 in British American Tobacco on November 3, 2024 and sell it today you would earn a total of 1,277 from holding British American Tobacco or generate 50.3% 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. Canon Marketing Japan
Performance |
| Timeline |
| British American Tobacco |
| Canon Marketing Japan |
British American and Canon Marketing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Canon Marketing
The main advantage of trading using opposite British American and Canon Marketing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Canon Marketing 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 Canon Marketing will offset losses from the drop in Canon Marketing's long position.| British American vs. PRECISION DRILLING P | British American vs. Hyatt Hotels | British American vs. Siamgas And Petrochemicals | British American vs. KINGBOARD CHEMICAL |
| Canon Marketing vs. AAC TECHNOLOGHLDGADR | Canon Marketing vs. SOFI TECHNOLOGIES | Canon Marketing vs. Merit Medical Systems | Canon Marketing vs. BioNTech SE |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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