Correlation Between Easy Software and British American
Can any of the company-specific risk be diversified away by investing in both Easy Software 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 Easy Software and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Easy Software AG and British American Tobacco, you can compare the effects of market volatilities on Easy Software 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 Easy Software with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easy Software and British American.
Diversification Opportunities for Easy Software and British American
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Easy and British is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG 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 Easy Software 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 Easy Software AG 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 Easy Software i.e., Easy Software and British American go up and down completely randomly.
Pair Corralation between Easy Software and British American
Assuming the 90 days trading horizon Easy Software AG is expected to generate 5.1 times more return on investment than British American. However, Easy Software is 5.1 times more volatile than British American Tobacco. It trades about 0.28 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.08 per unit of risk. If you would invest 1,520 in Easy Software AG on October 9, 2024 and sell it today you would earn a total of 280.00 from holding Easy Software AG or generate 18.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Easy Software AG vs. British American Tobacco
Performance |
| Timeline |
| Easy Software AG |
| British American Tobacco |
Easy Software and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Easy Software and British American
The main advantage of trading using opposite Easy Software and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easy Software 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.| Easy Software vs. Salesforce | Easy Software vs. Rocket Internet SE | Easy Software vs. Superior Plus Corp | Easy Software vs. NMI Holdings |
| British American vs. ECHO INVESTMENT ZY | British American vs. WisdomTree Investments | British American vs. PennantPark Investment | British American vs. Singapore Reinsurance |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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