Correlation Between Dunedin Enterprise and British American
Can any of the company-specific risk be diversified away by investing in both Dunedin Enterprise 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 Dunedin Enterprise and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunedin Enterprise Investment and British American Tobacco, you can compare the effects of market volatilities on Dunedin Enterprise 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 Dunedin Enterprise with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunedin Enterprise and British American.
Diversification Opportunities for Dunedin Enterprise and British American
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dunedin and British is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dunedin Enterprise Investment 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 Dunedin Enterprise 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 Dunedin Enterprise Investment 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 Dunedin Enterprise i.e., Dunedin Enterprise and British American go up and down completely randomly.
Pair Corralation between Dunedin Enterprise and British American
Assuming the 90 days trading horizon Dunedin Enterprise Investment is expected to under-perform the British American. In addition to that, Dunedin Enterprise is 1.01 times more volatile than British American Tobacco. It trades about -0.03 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.11 per unit of volatility. If you would invest 3,655 in British American Tobacco on August 30, 2024 and sell it today you would earn a total of 148.00 from holding British American Tobacco or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunedin Enterprise Investment vs. British American Tobacco
Performance |
| Timeline |
| Dunedin Enterprise |
| British American Tobacco |
Dunedin Enterprise and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunedin Enterprise and British American
The main advantage of trading using opposite Dunedin Enterprise and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunedin Enterprise 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.| Dunedin Enterprise vs. Samsung Electronics Co | Dunedin Enterprise vs. Samsung Electronics Co | Dunedin Enterprise vs. Hyundai Motor | Dunedin Enterprise vs. Toyota Motor Corp |
| British American vs. Tungsten West PLC | British American vs. Argo Group Limited | British American vs. Hardide PLC | British American vs. Versarien PLC |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |