Correlation Between British Amer and Reinet Investments
Can any of the company-specific risk be diversified away by investing in both British Amer and Reinet 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 Reinet 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 Reinet Investments SCA, you can compare the effects of market volatilities on British Amer and Reinet 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 Reinet Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Reinet Investments.
Diversification Opportunities for British Amer and Reinet Investments
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between British and Reinet is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Reinet Investments SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinet Investments SCA 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 Reinet Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinet Investments SCA has no effect on the direction of British Amer i.e., British Amer and Reinet Investments go up and down completely randomly.
Pair Corralation between British Amer and Reinet Investments
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.9 times more return on investment than Reinet Investments. However, British American Tobacco is 1.12 times less risky than Reinet Investments. It trades about 0.53 of its potential returns per unit of risk. Reinet Investments SCA is currently generating about -0.07 per unit of risk. If you would invest 6,079,500 in British American Tobacco on August 31, 2024 and sell it today you would earn a total of 752,500 from holding British American Tobacco or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Reinet Investments SCA
Performance |
| Timeline |
| British American Tobacco |
| Reinet Investments SCA |
British Amer and Reinet Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Reinet Investments
The main advantage of trading using opposite British Amer and Reinet Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Reinet 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 Reinet Investments will offset losses from the drop in Reinet Investments' long position.| British Amer vs. Centaur Bci Balanced | British Amer vs. Sabvest Capital | British Amer vs. AfricaRhodium ETF | British Amer vs. Indexco Limited |
| Reinet Investments vs. ABSA Bank Limited | Reinet Investments vs. African Media Entertainment | Reinet Investments vs. Harmony Gold Mining | Reinet Investments vs. Frontier Transport Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |