Correlation Between Cornish Metals and BAE Systems
Can any of the company-specific risk be diversified away by investing in both Cornish Metals and BAE Systems 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 BAE Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and BAE Systems plc, you can compare the effects of market volatilities on Cornish Metals and BAE Systems 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 BAE Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and BAE Systems.
Diversification Opportunities for Cornish Metals and BAE Systems
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cornish and BAE is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals and BAE Systems plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAE Systems plc 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 BAE Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAE Systems plc has no effect on the direction of Cornish Metals i.e., Cornish Metals and BAE Systems go up and down completely randomly.
Pair Corralation between Cornish Metals and BAE Systems
Assuming the 90 days trading horizon Cornish Metals is expected to under-perform the BAE Systems. In addition to that, Cornish Metals is 2.86 times more volatile than BAE Systems plc. It trades about -0.01 of its total potential returns per unit of risk. BAE Systems plc is currently generating about 0.07 per unit of volatility. If you would invest 78,990 in BAE Systems plc on September 2, 2024 and sell it today you would earn a total of 43,710 from holding BAE Systems plc or generate 55.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Cornish Metals vs. BAE Systems plc
Performance |
| Timeline |
| Cornish Metals |
| BAE Systems plc |
Cornish Metals and BAE Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and BAE Systems
The main advantage of trading using opposite Cornish Metals and BAE Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals position performs unexpectedly, BAE Systems 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 BAE Systems will offset losses from the drop in BAE Systems' long position.| Cornish Metals vs. Givaudan SA | Cornish Metals vs. Antofagasta PLC | Cornish Metals vs. Centamin PLC | Cornish Metals vs. Atalaya Mining |
| BAE Systems vs. Roper Technologies | BAE Systems vs. Automatic Data Processing | BAE Systems vs. Vitec Software Group | BAE Systems vs. Uber Technologies |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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