Correlation Between British Amer and Laird Superfood
Can any of the company-specific risk be diversified away by investing in both British Amer and Laird Superfood 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 Laird Superfood 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 Laird Superfood, you can compare the effects of market volatilities on British Amer and Laird Superfood 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 Laird Superfood. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Laird Superfood.
Diversification Opportunities for British Amer and Laird Superfood
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between British and Laird is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Laird Superfood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laird Superfood 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 Laird Superfood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laird Superfood has no effect on the direction of British Amer i.e., British Amer and Laird Superfood go up and down completely randomly.
Pair Corralation between British Amer and Laird Superfood
Considering the 90-day investment horizon British Amer is expected to generate 5.88 times less return on investment than Laird Superfood. But when comparing it to its historical volatility, British American Tobacco is 7.39 times less risky than Laird Superfood. It trades about 0.21 of its potential returns per unit of risk. Laird Superfood is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 260.00 in Laird Superfood on August 27, 2024 and sell it today you would earn a total of 625.00 from holding Laird Superfood or generate 240.38% 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. Laird Superfood
Performance |
| Timeline |
| British American Tobacco |
| Laird Superfood |
British Amer and Laird Superfood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Laird Superfood
The main advantage of trading using opposite British Amer and Laird Superfood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Laird Superfood 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 Laird Superfood will offset losses from the drop in Laird Superfood's long position.| British Amer vs. Philip Morris International | British Amer vs. Universal | British Amer vs. Imperial Brands PLC | British Amer vs. Altria Group |
| Laird Superfood vs. Better Choice | Laird Superfood vs. Sharing Services Global | Laird Superfood vs. Bit Origin | Laird Superfood vs. Planet Green 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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