Correlation Between Transport International and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both Transport International and BRIT 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 Transport International and BRIT AMER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and BRIT AMER TOBACCO, you can compare the effects of market volatilities on Transport International and BRIT 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 Transport International with a short position of BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and BRIT AMER.
Diversification Opportunities for Transport International and BRIT AMER
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transport and BRIT is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO and Transport International 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 Transport International Holdings are associated (or correlated) with BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of Transport International i.e., Transport International and BRIT AMER go up and down completely randomly.
Pair Corralation between Transport International and BRIT AMER
Assuming the 90 days horizon Transport International Holdings is expected to under-perform the BRIT AMER. But the stock apears to be less risky and, when comparing its historical volatility, Transport International Holdings is 1.11 times less risky than BRIT AMER. The stock trades about -0.07 of its potential returns per unit of risk. The BRIT AMER TOBACCO is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,531 in BRIT AMER TOBACCO on October 30, 2024 and sell it today you would earn a total of 229.00 from holding BRIT AMER TOBACCO or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| Transport International |
| BRIT AMER TOBACCO |
Transport International and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and BRIT AMER
The main advantage of trading using opposite Transport International and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International position performs unexpectedly, BRIT 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| Transport International vs. The Yokohama Rubber | Transport International vs. Iridium Communications | Transport International vs. SANOK RUBBER ZY | Transport International vs. Rayonier Advanced Materials |
| BRIT AMER vs. NORTHEAST UTILITIES | BRIT AMER vs. Broadridge Financial Solutions | BRIT AMER vs. Gaztransport Technigaz SA | BRIT AMER vs. THAI BEVERAGE |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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