Correlation Between British Amer and Xero
Can any of the company-specific risk be diversified away by investing in both British Amer and Xero 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 Xero 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 Xero, you can compare the effects of market volatilities on British Amer and Xero 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 Xero. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Xero.
Diversification Opportunities for British Amer and Xero
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between British and Xero is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bailador Technology Invest and Xero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xero 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 Xero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xero has no effect on the direction of British Amer i.e., British Amer and Xero go up and down completely randomly.
Pair Corralation between British Amer and Xero
Assuming the 90 days trading horizon British Amer is expected to generate 2.72 times less return on investment than Xero. But when comparing it to its historical volatility, Bailador Technology Invest is 1.25 times less risky than Xero. It trades about 0.11 of its potential returns per unit of risk. Xero is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 14,170 in Xero on August 28, 2024 and sell it today you would earn a total of 3,280 from holding Xero or generate 23.15% 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. Xero
Performance |
| Timeline |
| Bailador Technology |
| Xero |
British Amer and Xero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Xero
The main advantage of trading using opposite British Amer and Xero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Xero 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 Xero will offset losses from the drop in Xero's long position.| British Amer vs. National Australia Bank | British Amer vs. National Australia Bank | British Amer vs. Westpac Banking | British Amer vs. National Australia Bank |
| Xero vs. Bailador Technology Invest | Xero vs. Autosports Group | Xero vs. Infomedia | Xero vs. National Storage REIT |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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