Correlation Between Movida Participaes and British American
Can any of the company-specific risk be diversified away by investing in both Movida Participaes 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 Movida Participaes and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Movida Participaes SA and British American Tobacco, you can compare the effects of market volatilities on Movida Participaes 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 Movida Participaes with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Movida Participaes and British American.
Diversification Opportunities for Movida Participaes and British American
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Movida and British is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Movida Participaes SA 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 Movida Participaes 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 Movida Participaes SA 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 Movida Participaes i.e., Movida Participaes and British American go up and down completely randomly.
Pair Corralation between Movida Participaes and British American
Assuming the 90 days trading horizon Movida Participaes SA is expected to under-perform the British American. In addition to that, Movida Participaes is 6.19 times more volatile than British American Tobacco. It trades about -0.09 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.64 per unit of volatility. If you would invest 4,066 in British American Tobacco on September 1, 2024 and sell it today you would earn a total of 501.00 from holding British American Tobacco or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Movida Participaes SA vs. British American Tobacco
Performance |
| Timeline |
| Movida Participaes |
| British American Tobacco |
Movida Participaes and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Movida Participaes and British American
The main advantage of trading using opposite Movida Participaes and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Movida Participaes 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.| Movida Participaes vs. METISA Metalrgica Timboense | Movida Participaes vs. Lupatech SA | Movida Participaes vs. Fras le SA | Movida Participaes vs. Energisa SA |
| British American vs. Fras le SA | British American vs. Energisa SA | British American vs. Clave Indices De | British American vs. BTG Pactual Logstica |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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