Correlation Between British Amer and Zeder Investments
Can any of the company-specific risk be diversified away by investing in both British Amer and Zeder 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 Zeder 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 Zeder Investments, you can compare the effects of market volatilities on British Amer and Zeder 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 Zeder Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Zeder Investments.
Diversification Opportunities for British Amer and Zeder Investments
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between British and Zeder is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Zeder Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeder 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 Zeder Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeder Investments has no effect on the direction of British Amer i.e., British Amer and Zeder Investments go up and down completely randomly.
Pair Corralation between British Amer and Zeder Investments
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.49 times more return on investment than Zeder Investments. However, British American Tobacco is 2.05 times less risky than Zeder Investments. It trades about 0.14 of its potential returns per unit of risk. Zeder Investments is currently generating about 0.01 per unit of risk. If you would invest 5,497,956 in British American Tobacco on September 1, 2024 and sell it today you would earn a total of 1,333,044 from holding British American Tobacco or generate 24.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Zeder Investments
Performance |
| Timeline |
| British American Tobacco |
| Zeder Investments |
British Amer and Zeder Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Zeder Investments
The main advantage of trading using opposite British Amer and Zeder Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Zeder 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 Zeder Investments will offset losses from the drop in Zeder Investments' long position.| British Amer vs. Standard Bank Group | British Amer vs. Deneb Investments | British Amer vs. Ascendis Health | British Amer vs. Frontier Transport Holdings |
| Zeder Investments vs. Harmony Gold Mining | Zeder Investments vs. Astral Foods | Zeder Investments vs. Life Healthcare | Zeder Investments vs. British American Tobacco |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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