Correlation Between British Amer and Deneb Investments
Can any of the company-specific risk be diversified away by investing in both British Amer and Deneb 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 Deneb Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Deneb Investments, you can compare the effects of market volatilities on British Amer and Deneb 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 Deneb Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Deneb Investments.
Diversification Opportunities for British Amer and Deneb Investments
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between British and Deneb is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Deneb Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deneb 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 British American Tobacco are associated (or correlated) with Deneb Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deneb Investments has no effect on the direction of British Amer i.e., British Amer and Deneb Investments go up and down completely randomly.
Pair Corralation between British Amer and Deneb Investments
Assuming the 90 days trading horizon British American Tobacco is expected to generate 1.71 times more return on investment than Deneb Investments. However, British Amer is 1.71 times more volatile than Deneb Investments. It trades about 0.44 of its potential returns per unit of risk. Deneb Investments is currently generating about 0.4 per unit of risk. If you would invest 6,154,700 in British American Tobacco on August 28, 2024 and sell it today you would earn a total of 609,600 from holding British American Tobacco or generate 9.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Deneb Investments
Performance |
| Timeline |
| British American Tobacco |
| Deneb Investments |
British Amer and Deneb Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Deneb Investments
The main advantage of trading using opposite British Amer and Deneb Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Deneb 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 Deneb Investments will offset losses from the drop in Deneb Investments' long position.| British Amer vs. Sasol Ltd Bee | British Amer vs. Growthpoint Properties | British Amer vs. AfricaRhodium ETF | British Amer vs. CoreShares Preference Share |
| Deneb Investments vs. Blue Label Telecoms | Deneb Investments vs. CA Sales Holdings | Deneb Investments vs. Allied Electronics | Deneb Investments vs. RCL Foods |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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