Correlation Between Cass Saddle and BRITISH AMERICAN
Can any of the company-specific risk be diversified away by investing in both Cass Saddle and BRITISH 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 Cass Saddle and BRITISH AMERICAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cass Saddle Agriculture and BRITISH AMERICAN TOBACCO, you can compare the effects of market volatilities on Cass Saddle and BRITISH 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 Cass Saddle with a short position of BRITISH AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Saddle and BRITISH AMERICAN.
Diversification Opportunities for Cass Saddle and BRITISH AMERICAN
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cass and BRITISH is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cass Saddle Agriculture and BRITISH AMERICAN TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRITISH AMERICAN TOBACCO and Cass Saddle 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 Cass Saddle Agriculture are associated (or correlated) with BRITISH AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRITISH AMERICAN TOBACCO has no effect on the direction of Cass Saddle i.e., Cass Saddle and BRITISH AMERICAN go up and down completely randomly.
Pair Corralation between Cass Saddle and BRITISH AMERICAN
Assuming the 90 days trading horizon Cass Saddle Agriculture is expected to generate 0.62 times more return on investment than BRITISH AMERICAN. However, Cass Saddle Agriculture is 1.62 times less risky than BRITISH AMERICAN. It trades about 0.31 of its potential returns per unit of risk. BRITISH AMERICAN TOBACCO is currently generating about -0.02 per unit of risk. If you would invest 250.00 in Cass Saddle Agriculture on November 6, 2024 and sell it today you would earn a total of 250.00 from holding Cass Saddle Agriculture or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cass Saddle Agriculture vs. BRITISH AMERICAN TOBACCO
Performance |
| Timeline |
| Cass Saddle Agriculture |
| BRITISH AMERICAN TOBACCO |
Cass Saddle and BRITISH AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Saddle and BRITISH AMERICAN
The main advantage of trading using opposite Cass Saddle and BRITISH AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Saddle position performs unexpectedly, BRITISH 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 BRITISH AMERICAN will offset losses from the drop in BRITISH AMERICAN's long position.| Cass Saddle vs. STAR AFRICA PORATION | Cass Saddle vs. CAFCA LIMITED | Cass Saddle vs. FIRST MUTUAL PROPERTIES | Cass Saddle vs. AFRICAN DISTILLERS LIMITED |
| BRITISH AMERICAN vs. STAR AFRICA PORATION | BRITISH AMERICAN vs. CAFCA LIMITED | BRITISH AMERICAN vs. FIRST MUTUAL PROPERTIES | BRITISH AMERICAN vs. AFRICAN DISTILLERS LIMITED |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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