Correlation Between Morgan Co and BRITISH AMERICAN
Can any of the company-specific risk be diversified away by investing in both Morgan Co 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 Morgan Co and BRITISH AMERICAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Co Multi and BRITISH AMERICAN TOBACCO, you can compare the effects of market volatilities on Morgan Co 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 Morgan Co with a short position of BRITISH AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Co and BRITISH AMERICAN.
Diversification Opportunities for Morgan Co and BRITISH AMERICAN
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Morgan and BRITISH is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Co Multi 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 Morgan Co 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 Morgan Co Multi 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 Morgan Co i.e., Morgan Co and BRITISH AMERICAN go up and down completely randomly.
Pair Corralation between Morgan Co and BRITISH AMERICAN
Assuming the 90 days trading horizon Morgan Co Multi is expected to under-perform the BRITISH AMERICAN. But the stock apears to be less risky and, when comparing its historical volatility, Morgan Co Multi is 3.08 times less risky than BRITISH AMERICAN. The stock trades about -0.37 of its potential returns per unit of risk. The BRITISH AMERICAN TOBACCO is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 803,600 in BRITISH AMERICAN TOBACCO on October 28, 2024 and sell it today you would earn a total of 186,400 from holding BRITISH AMERICAN TOBACCO or generate 23.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Co Multi vs. BRITISH AMERICAN TOBACCO
Performance |
| Timeline |
| Morgan Co Multi |
| BRITISH AMERICAN TOBACCO |
Morgan Co and BRITISH AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Co and BRITISH AMERICAN
The main advantage of trading using opposite Morgan Co and BRITISH AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Co 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.| Morgan Co vs. FIRST MUTUAL PROPERTIES | Morgan Co vs. BRITISH AMERICAN TOBACCO | Morgan Co vs. TANGANDA TEA PANY | Morgan Co vs. ZB FINANCIAL HOLDINGS |
| BRITISH AMERICAN vs. FIRST MUTUAL PROPERTIES | BRITISH AMERICAN vs. TANGANDA TEA PANY | BRITISH AMERICAN vs. ZB FINANCIAL HOLDINGS | BRITISH AMERICAN vs. Cass Saddle Agriculture |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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