Correlation Between LBG Media and British American
Can any of the company-specific risk be diversified away by investing in both LBG Media 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 LBG Media and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LBG Media PLC and British American Tobacco, you can compare the effects of market volatilities on LBG Media 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 LBG Media with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBG Media and British American.
Diversification Opportunities for LBG Media and British American
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LBG and British is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding LBG Media PLC 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 LBG Media 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 LBG Media PLC 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 LBG Media i.e., LBG Media and British American go up and down completely randomly.
Pair Corralation between LBG Media and British American
Assuming the 90 days trading horizon LBG Media PLC is expected to under-perform the British American. In addition to that, LBG Media is 2.18 times more volatile than British American Tobacco. It trades about -0.04 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.14 per unit of volatility. If you would invest 3,406 in British American Tobacco on October 26, 2024 and sell it today you would earn a total of 302.00 from holding British American Tobacco or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LBG Media PLC vs. British American Tobacco
Performance |
| Timeline |
| LBG Media PLC |
| British American Tobacco |
LBG Media and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LBG Media and British American
The main advantage of trading using opposite LBG Media and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBG Media 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.| LBG Media vs. Sligro Food Group | LBG Media vs. Aeorema Communications Plc | LBG Media vs. Associated British Foods | LBG Media vs. Dairy Farm International |
| British American vs. Electronic Arts | British American vs. STMicroelectronics NV | British American vs. LBG Media PLC | British American vs. Samsung Electronics Co |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |