Correlation Between Cornish Metals and British American
Can any of the company-specific risk be diversified away by investing in both Cornish Metals 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 Cornish Metals and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and British American Tobacco, you can compare the effects of market volatilities on Cornish Metals 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 Cornish Metals with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and British American.
Diversification Opportunities for Cornish Metals and British American
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cornish and British is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals 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 Cornish Metals 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 Cornish Metals 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 Cornish Metals i.e., Cornish Metals and British American go up and down completely randomly.
Pair Corralation between Cornish Metals and British American
Assuming the 90 days trading horizon Cornish Metals is expected to generate 2.31 times more return on investment than British American. However, Cornish Metals is 2.31 times more volatile than British American Tobacco. It trades about 0.3 of its potential returns per unit of risk. British American Tobacco is currently generating about -0.07 per unit of risk. If you would invest 815.00 in Cornish Metals on October 11, 2024 and sell it today you would earn a total of 123.00 from holding Cornish Metals or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornish Metals vs. British American Tobacco
Performance |
| Timeline |
| Cornish Metals |
| British American Tobacco |
Cornish Metals and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and British American
The main advantage of trading using opposite Cornish Metals and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals 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.| Cornish Metals vs. DXC Technology Co | Cornish Metals vs. Air Products Chemicals | Cornish Metals vs. JLEN Environmental Assets | Cornish Metals vs. Foresight Environmental Infrastructure |
| British American vs. Panther Metals PLC | British American vs. Cornish Metals | British American vs. Futura Medical | British American vs. Lundin Mining Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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