Correlation Between British Amer and TDH Holdings
Can any of the company-specific risk be diversified away by investing in both British Amer and TDH Holdings 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 TDH Holdings 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 TDH Holdings, you can compare the effects of market volatilities on British Amer and TDH Holdings 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 TDH Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and TDH Holdings.
Diversification Opportunities for British Amer and TDH Holdings
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between British and TDH is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and TDH Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDH Holdings 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 TDH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDH Holdings has no effect on the direction of British Amer i.e., British Amer and TDH Holdings go up and down completely randomly.
Pair Corralation between British Amer and TDH Holdings
Considering the 90-day investment horizon British American Tobacco is expected to generate 0.46 times more return on investment than TDH Holdings. However, British American Tobacco is 2.19 times less risky than TDH Holdings. It trades about 0.38 of its potential returns per unit of risk. TDH Holdings is currently generating about -0.18 per unit of risk. If you would invest 3,491 in British American Tobacco on August 27, 2024 and sell it today you would earn a total of 242.00 from holding British American Tobacco or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. TDH Holdings
Performance |
| Timeline |
| British American Tobacco |
| TDH Holdings |
British Amer and TDH Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and TDH Holdings
The main advantage of trading using opposite British Amer and TDH Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, TDH Holdings 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 TDH Holdings will offset losses from the drop in TDH Holdings' long position.| British Amer vs. Philip Morris International | British Amer vs. Universal | British Amer vs. Imperial Brands PLC | British Amer vs. Altria Group |
| TDH Holdings vs. Bit Origin | TDH Holdings vs. Laird Superfood | TDH Holdings vs. Planet Green Holdings | TDH Holdings vs. Stryve Foods |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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