Correlation Between Spirent Communications and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and BRIT AMER 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 Spirent Communications and BRIT AMER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and BRIT AMER TOBACCO, you can compare the effects of market volatilities on Spirent Communications and BRIT AMER 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 Spirent Communications with a short position of BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and BRIT AMER.
Diversification Opportunities for Spirent Communications and BRIT AMER
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spirent and BRIT is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of Spirent Communications i.e., Spirent Communications and BRIT AMER go up and down completely randomly.
Pair Corralation between Spirent Communications and BRIT AMER
Assuming the 90 days horizon Spirent Communications plc is expected to under-perform the BRIT AMER. In addition to that, Spirent Communications is 3.61 times more volatile than BRIT AMER TOBACCO. It trades about -0.06 of its total potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.13 per unit of volatility. If you would invest 3,505 in BRIT AMER TOBACCO on October 28, 2024 and sell it today you would earn a total of 89.00 from holding BRIT AMER TOBACCO or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| Spirent Communications |
| BRIT AMER TOBACCO |
Spirent Communications and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and BRIT AMER
The main advantage of trading using opposite Spirent Communications and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| Spirent Communications vs. T Mobile | Spirent Communications vs. China Mobile Limited | Spirent Communications vs. Verizon Communications | Spirent Communications vs. ATT Inc |
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.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |