Correlation Between Empire Metals and British American
Can any of the company-specific risk be diversified away by investing in both Empire 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 Empire 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 Empire Metals Limited and British American Tobacco, you can compare the effects of market volatilities on Empire 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 Empire Metals with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and British American.
Diversification Opportunities for Empire Metals and British American
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Empire and British is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited 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 Empire 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 Empire Metals Limited 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 Empire Metals i.e., Empire Metals and British American go up and down completely randomly.
Pair Corralation between Empire Metals and British American
Assuming the 90 days trading horizon Empire Metals Limited is expected to under-perform the British American. In addition to that, Empire Metals is 3.69 times more volatile than British American Tobacco. It trades about -0.11 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.73 per unit of volatility. If you would invest 3,449 in British American Tobacco on August 30, 2024 and sell it today you would earn a total of 354.00 from holding British American Tobacco or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire Metals Limited vs. British American Tobacco
Performance |
| Timeline |
| Empire Metals Limited |
| British American Tobacco |
Empire Metals and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and British American
The main advantage of trading using opposite Empire Metals and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire 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.| Empire Metals vs. Broadridge Financial Solutions | Empire Metals vs. EVS Broadcast Equipment | Empire Metals vs. Anglo Asian Mining | Empire Metals vs. Roadside Real Estate |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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