Correlation Between Globe Trade and British American
Can any of the company-specific risk be diversified away by investing in both Globe Trade 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 Globe Trade and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Trade Centre and British American Tobacco, you can compare the effects of market volatilities on Globe Trade 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 Globe Trade with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Trade and British American.
Diversification Opportunities for Globe Trade and British American
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Globe and British is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre 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 Globe Trade 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 Globe Trade Centre 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 Globe Trade i.e., Globe Trade and British American go up and down completely randomly.
Pair Corralation between Globe Trade and British American
Assuming the 90 days trading horizon Globe Trade is expected to generate 10.62 times less return on investment than British American. In addition to that, Globe Trade is 2.32 times more volatile than British American Tobacco. It trades about 0.01 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.18 per unit of volatility. If you would invest 2,778 in British American Tobacco on September 5, 2024 and sell it today you would earn a total of 770.00 from holding British American Tobacco or generate 27.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Trade Centre vs. British American Tobacco
Performance |
| Timeline |
| Globe Trade Centre |
| British American Tobacco |
Globe Trade and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Trade and British American
The main advantage of trading using opposite Globe Trade and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Trade 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.| Globe Trade vs. TOTAL GABON | Globe Trade vs. Walgreens Boots Alliance | Globe Trade vs. Peak Resources Limited |
| British American vs. British American Tobacco | British American vs. JAPAN TOBACCO UNSPADR12 | British American vs. Imperial Brands 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |