Correlation Between Imperial Brands and Bisichi Mining
Can any of the company-specific risk be diversified away by investing in both Imperial Brands and Bisichi Mining 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 Imperial Brands and Bisichi Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imperial Brands PLC and Bisichi Mining PLC, you can compare the effects of market volatilities on Imperial Brands and Bisichi Mining 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 Imperial Brands with a short position of Bisichi Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Brands and Bisichi Mining.
Diversification Opportunities for Imperial Brands and Bisichi Mining
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Imperial and Bisichi is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Brands PLC and Bisichi Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisichi Mining PLC and Imperial Brands 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 Imperial Brands PLC are associated (or correlated) with Bisichi Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisichi Mining PLC has no effect on the direction of Imperial Brands i.e., Imperial Brands and Bisichi Mining go up and down completely randomly.
Pair Corralation between Imperial Brands and Bisichi Mining
Assuming the 90 days trading horizon Imperial Brands PLC is expected to generate 0.93 times more return on investment than Bisichi Mining. However, Imperial Brands PLC is 1.08 times less risky than Bisichi Mining. It trades about 0.12 of its potential returns per unit of risk. Bisichi Mining PLC is currently generating about -0.32 per unit of risk. If you would invest 256,500 in Imperial Brands PLC on October 24, 2024 and sell it today you would earn a total of 3,700 from holding Imperial Brands PLC or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Brands PLC vs. Bisichi Mining PLC
Performance |
| Timeline |
| Imperial Brands PLC |
| Bisichi Mining PLC |
Imperial Brands and Bisichi Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Brands and Bisichi Mining
The main advantage of trading using opposite Imperial Brands and Bisichi Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Brands position performs unexpectedly, Bisichi Mining 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 Bisichi Mining will offset losses from the drop in Bisichi Mining's long position.| Imperial Brands vs. Charter Communications Cl | Imperial Brands vs. Ecclesiastical Insurance Office | Imperial Brands vs. Silvercorp Metals | Imperial Brands vs. Batm Advanced Communications |
| Bisichi Mining vs. Various Eateries PLC | Bisichi Mining vs. Fortune Brands Home | Bisichi Mining vs. Cairn Homes PLC | Bisichi Mining vs. Universal Display Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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