Correlation Between British American and NTG Nordic
Can any of the company-specific risk be diversified away by investing in both British American and NTG Nordic 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 NTG Nordic 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 NTG Nordic Transport, you can compare the effects of market volatilities on British American and NTG Nordic 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 NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and NTG Nordic.
Diversification Opportunities for British American and NTG Nordic
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between British and NTG is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport 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 NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of British American i.e., British American and NTG Nordic go up and down completely randomly.
Pair Corralation between British American and NTG Nordic
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.39 times more return on investment than NTG Nordic. However, British American Tobacco is 2.53 times less risky than NTG Nordic. It trades about 0.72 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.1 per unit of risk. If you would invest 3,208 in British American Tobacco on August 30, 2024 and sell it today you would earn a total of 393.00 from holding British American Tobacco or generate 12.25% 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. NTG Nordic Transport
Performance |
| Timeline |
| British American Tobacco |
| NTG Nordic Transport |
British American and NTG Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and NTG Nordic
The main advantage of trading using opposite British American and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, NTG Nordic 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 NTG Nordic will offset losses from the drop in NTG Nordic's long position.| British American vs. JAPAN TOBACCO UNSPADR12 | British American vs. Superior Plus Corp | British American vs. NMI Holdings | British American vs. SIVERS SEMICONDUCTORS AB |
| NTG Nordic vs. Superior Plus Corp | NTG Nordic vs. NMI Holdings | NTG Nordic vs. SIVERS SEMICONDUCTORS AB | NTG Nordic vs. Talanx AG |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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