Correlation Between British Amer and Kaival Brands
Can any of the company-specific risk be diversified away by investing in both British Amer and Kaival 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 Kaival 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 Kaival Brands Innovations, you can compare the effects of market volatilities on British Amer and Kaival 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 Kaival Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Kaival Brands.
Diversification Opportunities for British Amer and Kaival Brands
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between British and Kaival is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Kaival Brands Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaival Brands Innovations 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 Kaival Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaival Brands Innovations has no effect on the direction of British Amer i.e., British Amer and Kaival Brands go up and down completely randomly.
Pair Corralation between British Amer and Kaival Brands
Considering the 90-day investment horizon British American Tobacco is expected to generate 0.21 times more return on investment than Kaival Brands. However, British American Tobacco is 4.7 times less risky than Kaival Brands. It trades about 0.42 of its potential returns per unit of risk. Kaival Brands Innovations is currently generating about -0.33 per unit of risk. If you would invest 3,491 in British American Tobacco on August 28, 2024 and sell it today you would earn a total of 280.00 from holding British American Tobacco or generate 8.02% 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. Kaival Brands Innovations
Performance |
| Timeline |
| British American Tobacco |
| Kaival Brands Innovations |
British Amer and Kaival Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Kaival Brands
The main advantage of trading using opposite British Amer and Kaival Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Kaival 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 Kaival Brands will offset losses from the drop in Kaival Brands' long position.| British Amer vs. Imperial Brands PLC | British Amer vs. Philip Morris International | British Amer vs. Japan Tobacco ADR | British Amer vs. Imperial Brands PLC |
| Kaival Brands vs. Green Globe International | Kaival Brands vs. Greenlane Holdings | Kaival Brands vs. RLX Technology | Kaival Brands vs. 22nd Century Group |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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