Correlation Between HomeChoice Investments and British Amer
Can any of the company-specific risk be diversified away by investing in both HomeChoice Investments and British Amer 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 HomeChoice Investments and British Amer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeChoice Investments and British American Tobacco, you can compare the effects of market volatilities on HomeChoice Investments and British Amer 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 HomeChoice Investments with a short position of British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeChoice Investments and British Amer.
Diversification Opportunities for HomeChoice Investments and British Amer
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HomeChoice and British is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding HomeChoice Investments 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 HomeChoice Investments 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 HomeChoice Investments are associated (or correlated) with British Amer. 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 HomeChoice Investments i.e., HomeChoice Investments and British Amer go up and down completely randomly.
Pair Corralation between HomeChoice Investments and British Amer
Assuming the 90 days trading horizon HomeChoice Investments is expected to under-perform the British Amer. In addition to that, HomeChoice Investments is 4.33 times more volatile than British American Tobacco. It trades about -0.22 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.44 per unit of volatility. If you would invest 6,154,700 in British American Tobacco on August 28, 2024 and sell it today you would earn a total of 609,600 from holding British American Tobacco or generate 9.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HomeChoice Investments vs. British American Tobacco
Performance |
| Timeline |
| HomeChoice Investments |
| British American Tobacco |
HomeChoice Investments and British Amer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeChoice Investments and British Amer
The main advantage of trading using opposite HomeChoice Investments and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeChoice Investments position performs unexpectedly, British Amer 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 Amer will offset losses from the drop in British Amer's long position.| HomeChoice Investments vs. Sasol Ltd Bee | HomeChoice Investments vs. Centaur Bci Balanced | HomeChoice Investments vs. Sabvest Capital | HomeChoice Investments vs. Growthpoint Properties |
| British Amer vs. Sasol Ltd Bee | British Amer vs. Growthpoint Properties | British Amer vs. AfricaRhodium ETF | British Amer vs. CoreShares Preference Share |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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