Correlation Between British Amer and Environmental
Can any of the company-specific risk be diversified away by investing in both British Amer and Environmental 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 Amer and Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bailador Technology Invest and The Environmental Group, you can compare the effects of market volatilities on British Amer and Environmental 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 Amer with a short position of Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Environmental.
Diversification Opportunities for British Amer and Environmental
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between British and Environmental is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bailador Technology Invest and The Environmental Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Environmental and British Amer 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 Bailador Technology Invest are associated (or correlated) with Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Environmental has no effect on the direction of British Amer i.e., British Amer and Environmental go up and down completely randomly.
Pair Corralation between British Amer and Environmental
Assuming the 90 days trading horizon Bailador Technology Invest is expected to generate 0.22 times more return on investment than Environmental. However, Bailador Technology Invest is 4.46 times less risky than Environmental. It trades about 0.05 of its potential returns per unit of risk. The Environmental Group is currently generating about -0.34 per unit of risk. If you would invest 125.00 in Bailador Technology Invest on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Bailador Technology Invest or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bailador Technology Invest vs. The Environmental Group
Performance |
| Timeline |
| Bailador Technology |
| The Environmental |
British Amer and Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Environmental
The main advantage of trading using opposite British Amer and Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Environmental 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 Environmental will offset losses from the drop in Environmental's long position.| British Amer vs. Energy Resources | British Amer vs. 88 Energy | British Amer vs. Amani Gold | British Amer vs. A1 Investments Resources |
| Environmental vs. Aneka Tambang Tbk | Environmental vs. Macquarie Group | Environmental vs. Challenger | Environmental vs. BHP Group Limited |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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