Correlation Between Panther Metals and British American
Can any of the company-specific risk be diversified away by investing in both Panther Metals 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 Panther Metals and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Panther Metals PLC and British American Tobacco, you can compare the effects of market volatilities on Panther Metals 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 Panther Metals with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panther Metals and British American.
Diversification Opportunities for Panther Metals and British American
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Panther and British is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Panther Metals 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 Panther Metals 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 Panther Metals 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 Panther Metals i.e., Panther Metals and British American go up and down completely randomly.
Pair Corralation between Panther Metals and British American
Assuming the 90 days trading horizon Panther Metals PLC is expected to generate 3.25 times more return on investment than British American. However, Panther Metals is 3.25 times more volatile than British American Tobacco. It trades about 0.08 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.08 per unit of risk. If you would invest 6,500 in Panther Metals PLC on August 27, 2024 and sell it today you would earn a total of 5,750 from holding Panther Metals PLC or generate 88.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Panther Metals PLC vs. British American Tobacco
Performance |
| Timeline |
| Panther Metals PLC |
| British American Tobacco |
Panther Metals and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Panther Metals and British American
The main advantage of trading using opposite Panther Metals and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panther Metals 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.| Panther Metals vs. Givaudan SA | Panther Metals vs. Antofagasta PLC | Panther Metals vs. Centamin PLC | Panther Metals vs. Atalaya Mining |
| British American vs. Pets at Home | British American vs. Home Depot | British American vs. Southwest Airlines Co | British American vs. Orient Telecoms |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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