Correlation Between British Amer and Ninety One
Can any of the company-specific risk be diversified away by investing in both British Amer and Ninety One 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 Ninety One 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 Ninety One, you can compare the effects of market volatilities on British Amer and Ninety One 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 Ninety One. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Ninety One.
Diversification Opportunities for British Amer and Ninety One
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between British and Ninety is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Ninety One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ninety One 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 Ninety One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ninety One has no effect on the direction of British Amer i.e., British Amer and Ninety One go up and down completely randomly.
Pair Corralation between British Amer and Ninety One
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.95 times more return on investment than Ninety One. However, British American Tobacco is 1.05 times less risky than Ninety One. It trades about 0.32 of its potential returns per unit of risk. Ninety One is currently generating about -0.17 per unit of risk. If you would invest 6,170,000 in British American Tobacco on August 24, 2024 and sell it today you would earn a total of 465,400 from holding British American Tobacco or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Ninety One
Performance |
| Timeline |
| British American Tobacco |
| Ninety One |
British Amer and Ninety One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Ninety One
The main advantage of trading using opposite British Amer and Ninety One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Ninety One 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 Ninety One will offset losses from the drop in Ninety One's long position.| British Amer vs. Safari Investments RSA | British Amer vs. Hosken Consolidated Investments | British Amer vs. Deneb Investments | British Amer vs. Bytes Technology |
| Ninety One vs. African Media Entertainment | Ninety One vs. Safari Investments RSA | Ninety One vs. Capitec Bank Holdings | Ninety One vs. HomeChoice Investments |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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