Correlation Between FARM 51 and British American
Can any of the company-specific risk be diversified away by investing in both FARM 51 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 FARM 51 and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM 51 GROUP and British American Tobacco, you can compare the effects of market volatilities on FARM 51 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 FARM 51 with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM 51 and British American.
Diversification Opportunities for FARM 51 and British American
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between FARM and British is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding FARM 51 GROUP 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 FARM 51 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 FARM 51 GROUP 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 FARM 51 i.e., FARM 51 and British American go up and down completely randomly.
Pair Corralation between FARM 51 and British American
Assuming the 90 days horizon FARM 51 GROUP is expected to generate 1.74 times more return on investment than British American. However, FARM 51 is 1.74 times more volatile than British American Tobacco. It trades about 0.21 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.19 per unit of risk. If you would invest 296.00 in FARM 51 GROUP on November 4, 2024 and sell it today you would earn a total of 42.00 from holding FARM 51 GROUP or generate 14.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARM 51 GROUP vs. British American Tobacco
Performance |
| Timeline |
| FARM 51 GROUP |
| British American Tobacco |
FARM 51 and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM 51 and British American
The main advantage of trading using opposite FARM 51 and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM 51 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.| FARM 51 vs. BRIT AMER TOBACCO | FARM 51 vs. Guangdong Investment Limited | FARM 51 vs. The Trade Desk | FARM 51 vs. JAPAN TOBACCO UNSPADR12 |
| British American vs. Hisense Home Appliances | British American vs. Gruppo Mutuionline SpA | British American vs. Salesforce | British American vs. SALESFORCE INC CDR |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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