Correlation Between Commercial Vehicle and British American
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle 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 Commercial Vehicle and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and British American Tobacco, you can compare the effects of market volatilities on Commercial Vehicle 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 Commercial Vehicle with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and British American.
Diversification Opportunities for Commercial Vehicle and British American
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commercial and British is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle 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 Commercial Vehicle 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 Commercial Vehicle 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 Commercial Vehicle i.e., Commercial Vehicle and British American go up and down completely randomly.
Pair Corralation between Commercial Vehicle and British American
Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the British American. In addition to that, Commercial Vehicle is 5.47 times more volatile than British American Tobacco. It trades about -0.25 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.78 per unit of volatility. If you would invest 3,181 in British American Tobacco on August 31, 2024 and sell it today you would earn a total of 414.00 from holding British American Tobacco or generate 13.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Commercial Vehicle Group vs. British American Tobacco
Performance |
| Timeline |
| Commercial Vehicle |
| British American Tobacco |
Commercial Vehicle and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and British American
The main advantage of trading using opposite Commercial Vehicle and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle 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.| Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |