Correlation Between BII Railway and Pan American
Can any of the company-specific risk be diversified away by investing in both BII Railway and Pan American 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 BII Railway and Pan American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and Pan American Silver, you can compare the effects of market volatilities on BII Railway and Pan American 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 BII Railway with a short position of Pan American. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Pan American.
Diversification Opportunities for BII Railway and Pan American
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between BII and Pan is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Pan American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan American Silver and BII Railway 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 BII Railway Transportation are associated (or correlated) with Pan American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan American Silver has no effect on the direction of BII Railway i.e., BII Railway and Pan American go up and down completely randomly.
Pair Corralation between BII Railway and Pan American
Assuming the 90 days horizon BII Railway Transportation is expected to generate 0.57 times more return on investment than Pan American. However, BII Railway Transportation is 1.75 times less risky than Pan American. It trades about 0.1 of its potential returns per unit of risk. Pan American Silver is currently generating about 0.03 per unit of risk. If you would invest 2.60 in BII Railway Transportation on October 26, 2024 and sell it today you would earn a total of 0.15 from holding BII Railway Transportation or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.5% |
| Values | Daily Returns |
BII Railway Transportation vs. Pan American Silver
Performance |
| Timeline |
| BII Railway Transpor |
| Pan American Silver |
BII Railway and Pan American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Pan American
The main advantage of trading using opposite BII Railway and Pan American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, Pan American 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 Pan American will offset losses from the drop in Pan American's long position.| BII Railway vs. Axway Software SA | BII Railway vs. GRENKELEASING Dusseldorf | BII Railway vs. Take Two Interactive Software | BII Railway vs. Global Ship Lease |
| Pan American vs. BII Railway Transportation | Pan American vs. alstria office REIT AG | Pan American vs. Infrastrutture Wireless Italiane | Pan American vs. Gaztransport Technigaz SA |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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