Correlation Between British Amer and Ecofibre
Can any of the company-specific risk be diversified away by investing in both British Amer and Ecofibre 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 Ecofibre 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 Ecofibre, you can compare the effects of market volatilities on British Amer and Ecofibre 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 Ecofibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Ecofibre.
Diversification Opportunities for British Amer and Ecofibre
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between British and Ecofibre is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bailador Technology Invest and Ecofibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofibre 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 Ecofibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofibre has no effect on the direction of British Amer i.e., British Amer and Ecofibre go up and down completely randomly.
Pair Corralation between British Amer and Ecofibre
Assuming the 90 days trading horizon British Amer is expected to generate 2.67 times less return on investment than Ecofibre. But when comparing it to its historical volatility, Bailador Technology Invest is 6.9 times less risky than Ecofibre. It trades about 0.11 of its potential returns per unit of risk. Ecofibre is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2.90 in Ecofibre on September 12, 2024 and sell it today you would earn a total of 0.10 from holding Ecofibre or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bailador Technology Invest vs. Ecofibre
Performance |
| Timeline |
| Bailador Technology |
| Ecofibre |
British Amer and Ecofibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Ecofibre
The main advantage of trading using opposite British Amer and Ecofibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Ecofibre 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 Ecofibre will offset losses from the drop in Ecofibre's long position.| British Amer vs. Embark Education Group | British Amer vs. Diversified United Investment | British Amer vs. Cleanaway Waste Management | British Amer vs. MFF Capital Investments |
| Ecofibre vs. Computershare | Ecofibre vs. Retail Food Group | Ecofibre vs. Hutchison Telecommunications | Ecofibre vs. Oneview Healthcare PLC |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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