Correlation Between British Amer and Smoore International
Can any of the company-specific risk be diversified away by investing in both British Amer and Smoore International 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 Smoore International 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 Smoore International Holdings, you can compare the effects of market volatilities on British Amer and Smoore International 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 Smoore International. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Smoore International.
Diversification Opportunities for British Amer and Smoore International
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between British and Smoore is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Smoore International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smoore International 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 Smoore International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smoore International has no effect on the direction of British Amer i.e., British Amer and Smoore International go up and down completely randomly.
Pair Corralation between British Amer and Smoore International
Considering the 90-day investment horizon British Amer is expected to generate 2.4 times less return on investment than Smoore International. But when comparing it to its historical volatility, British American Tobacco is 2.88 times less risky than Smoore International. It trades about 0.06 of its potential returns per unit of risk. Smoore International Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 78.00 in Smoore International Holdings on October 24, 2024 and sell it today you would earn a total of 44.00 from holding Smoore International Holdings or generate 56.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Smoore International Holdings
Performance |
| Timeline |
| British American Tobacco |
| Smoore International |
British Amer and Smoore International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Smoore International
The main advantage of trading using opposite British Amer and Smoore International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Smoore International 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 Smoore International will offset losses from the drop in Smoore International's long position.| British Amer vs. Philip Morris International | British Amer vs. Universal | British Amer vs. Imperial Brands PLC | British Amer vs. Altria Group |
| Smoore International vs. 22nd Century Group | Smoore International vs. British American Tobacco | Smoore International 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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