Correlation Between National Retail and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both National Retail 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 National Retail and BRIT AMER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and BRIT AMER TOBACCO, you can compare the effects of market volatilities on National Retail 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 National Retail with a short position of BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and BRIT AMER.
Diversification Opportunities for National Retail and BRIT AMER
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and BRIT is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties 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 National Retail 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 National Retail Properties 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 National Retail i.e., National Retail and BRIT AMER go up and down completely randomly.
Pair Corralation between National Retail and BRIT AMER
Assuming the 90 days trading horizon National Retail is expected to generate 15.34 times less return on investment than BRIT AMER. But when comparing it to its historical volatility, National Retail Properties is 1.49 times less risky than BRIT AMER. It trades about 0.03 of its potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,316 in BRIT AMER TOBACCO on September 12, 2024 and sell it today you would earn a total of 265.00 from holding BRIT AMER TOBACCO or generate 7.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
National Retail Properties vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| National Retail Prop |
| BRIT AMER TOBACCO |
National Retail and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and BRIT AMER
The main advantage of trading using opposite National Retail and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail 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.| National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc |
| BRIT AMER vs. PLAYMATES TOYS | BRIT AMER vs. TSOGO SUN GAMING | BRIT AMER vs. COFCO Joycome Foods | BRIT AMER vs. GigaMedia |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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