Correlation Between British Amer and Imperial Brands
Can any of the company-specific risk be diversified away by investing in both British Amer and Imperial Brands 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 Imperial Brands 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 Imperial Brands PLC, you can compare the effects of market volatilities on British Amer and Imperial Brands 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 Imperial Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Imperial Brands.
Diversification Opportunities for British Amer and Imperial Brands
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between British and Imperial is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Imperial Brands PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Brands PLC 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 Imperial Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Brands PLC has no effect on the direction of British Amer i.e., British Amer and Imperial Brands go up and down completely randomly.
Pair Corralation between British Amer and Imperial Brands
Considering the 90-day investment horizon British American Tobacco is expected to generate 1.0 times more return on investment than Imperial Brands. However, British Amer is 1.0 times more volatile than Imperial Brands PLC. It trades about 0.24 of its potential returns per unit of risk. Imperial Brands PLC is currently generating about 0.2 per unit of risk. If you would invest 3,436 in British American Tobacco on November 1, 2024 and sell it today you would earn a total of 531.50 from holding British American Tobacco or generate 15.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Imperial Brands PLC
Performance |
| Timeline |
| British American Tobacco |
| Imperial Brands PLC |
British Amer and Imperial Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Imperial Brands
The main advantage of trading using opposite British Amer and Imperial Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Imperial Brands 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 Imperial Brands will offset losses from the drop in Imperial Brands' long position.| British Amer vs. Turning Point Brands | British Amer vs. Green Globe International | British Amer vs. Imperial Brands PLC | British Amer vs. Kaival Brands Innovations |
| Imperial Brands vs. Turning Point Brands | Imperial Brands vs. Universal | Imperial Brands vs. Japan Tobacco ADR | Imperial Brands vs. Philip Morris International |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |