Correlation Between British Amer and Flagship Investments
Can any of the company-specific risk be diversified away by investing in both British Amer and Flagship Investments 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 Flagship Investments 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 Flagship Investments, you can compare the effects of market volatilities on British Amer and Flagship Investments 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 Flagship Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Flagship Investments.
Diversification Opportunities for British Amer and Flagship Investments
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between British and Flagship is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bailador Technology Invest and Flagship Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flagship Investments 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 Flagship Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flagship Investments has no effect on the direction of British Amer i.e., British Amer and Flagship Investments go up and down completely randomly.
Pair Corralation between British Amer and Flagship Investments
Assuming the 90 days trading horizon British Amer is expected to generate 8.47 times less return on investment than Flagship Investments. But when comparing it to its historical volatility, Bailador Technology Invest is 1.48 times less risky than Flagship Investments. It trades about 0.05 of its potential returns per unit of risk. Flagship Investments is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 200.00 in Flagship Investments on September 1, 2024 and sell it today you would earn a total of 15.00 from holding Flagship Investments or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bailador Technology Invest vs. Flagship Investments
Performance |
| Timeline |
| Bailador Technology |
| Flagship Investments |
British Amer and Flagship Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Flagship Investments
The main advantage of trading using opposite British Amer and Flagship Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Flagship Investments 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 Flagship Investments will offset losses from the drop in Flagship Investments' long position.| British Amer vs. WA1 Resources | British Amer vs. Predictive Discovery | British Amer vs. Cooper Metals | British Amer vs. OD6 Metals |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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