Correlation Between Bankers Investment and Associated British
Can any of the company-specific risk be diversified away by investing in both Bankers Investment and Associated British 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 Bankers Investment and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bankers Investment Trust and Associated British Foods, you can compare the effects of market volatilities on Bankers Investment and Associated British 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 Bankers Investment with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankers Investment and Associated British.
Diversification Opportunities for Bankers Investment and Associated British
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bankers and Associated is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bankers Investment Trust and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and Bankers Investment 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 Bankers Investment Trust are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Bankers Investment i.e., Bankers Investment and Associated British go up and down completely randomly.
Pair Corralation between Bankers Investment and Associated British
Assuming the 90 days trading horizon Bankers Investment Trust is expected to generate 0.64 times more return on investment than Associated British. However, Bankers Investment Trust is 1.56 times less risky than Associated British. It trades about 0.02 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.11 per unit of risk. If you would invest 11,124 in Bankers Investment Trust on September 24, 2024 and sell it today you would earn a total of 276.00 from holding Bankers Investment Trust or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bankers Investment Trust vs. Associated British Foods
Performance |
| Timeline |
| Bankers Investment Trust |
| Associated British Foods |
Bankers Investment and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bankers Investment and Associated British
The main advantage of trading using opposite Bankers Investment and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankers Investment position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Bankers Investment vs. Samsung Electronics Co | Bankers Investment vs. Samsung Electronics Co | Bankers Investment vs. Hyundai Motor | Bankers Investment vs. Toyota Motor Corp |
| Associated British vs. Aeorema Communications Plc | Associated British vs. MTI Wireless Edge | Associated British vs. British American Tobacco | Associated British vs. Molson Coors Beverage |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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