Correlation Between Nordon Indstrias and British American
Can any of the company-specific risk be diversified away by investing in both Nordon Indstrias 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 Nordon Indstrias and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordon Indstrias Metalrgicas and British American Tobacco, you can compare the effects of market volatilities on Nordon Indstrias 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 Nordon Indstrias with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordon Indstrias and British American.
Diversification Opportunities for Nordon Indstrias and British American
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordon and British is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nordon Indstrias Metalrgicas 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 Nordon Indstrias 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 Nordon Indstrias Metalrgicas 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 Nordon Indstrias i.e., Nordon Indstrias and British American go up and down completely randomly.
Pair Corralation between Nordon Indstrias and British American
Assuming the 90 days trading horizon Nordon Indstrias Metalrgicas is expected to generate 7.64 times more return on investment than British American. However, Nordon Indstrias is 7.64 times more volatile than British American Tobacco. It trades about 0.05 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.12 per unit of risk. If you would invest 540.00 in Nordon Indstrias Metalrgicas on September 15, 2024 and sell it today you would earn a total of 120.00 from holding Nordon Indstrias Metalrgicas or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Nordon Indstrias Metalrgicas vs. British American Tobacco
Performance |
| Timeline |
| Nordon Indstrias Met |
| British American Tobacco |
Nordon Indstrias and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordon Indstrias and British American
The main advantage of trading using opposite Nordon Indstrias and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordon Indstrias 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.| Nordon Indstrias vs. Lupatech SA | Nordon Indstrias vs. Recrusul SA | Nordon Indstrias vs. Fundo Investimento Imobiliario | Nordon Indstrias vs. LESTE FDO INV |
| British American vs. Fundo Investimento Imobiliario | British American vs. LESTE FDO INV | British American vs. Fras le SA | British American vs. Western Digital |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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