Correlation Between Heidelberg Materials and British American
Can any of the company-specific risk be diversified away by investing in both Heidelberg Materials 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 Heidelberg Materials and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heidelberg Materials AG and British American Tobacco, you can compare the effects of market volatilities on Heidelberg Materials 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 Heidelberg Materials with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Materials and British American.
Diversification Opportunities for Heidelberg Materials and British American
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Heidelberg and British is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials 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 Heidelberg Materials 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 Heidelberg Materials 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 Heidelberg Materials i.e., Heidelberg Materials and British American go up and down completely randomly.
Pair Corralation between Heidelberg Materials and British American
Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 1.43 times more return on investment than British American. However, Heidelberg Materials is 1.43 times more volatile than British American Tobacco. It trades about 0.22 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.16 per unit of risk. If you would invest 11,905 in Heidelberg Materials AG on October 29, 2024 and sell it today you would earn a total of 1,600 from holding Heidelberg Materials AG or generate 13.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heidelberg Materials AG vs. British American Tobacco
Performance |
| Timeline |
| Heidelberg Materials |
| British American Tobacco |
Heidelberg Materials and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heidelberg Materials and British American
The main advantage of trading using opposite Heidelberg Materials and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials 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.| Heidelberg Materials vs. WillScot Mobile Mini | Heidelberg Materials vs. British American Tobacco | Heidelberg Materials vs. Verizon Communications | Heidelberg Materials vs. Zoom Video Communications |
| British American vs. InterContinental Hotels Group | British American vs. Sunstone Hotel Investors | British American vs. TOWNSQUARE MEDIA INC | British American vs. Summit Hotel Properties |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |