Correlation Between SERI INDUSTRIAL and British American
Can any of the company-specific risk be diversified away by investing in both SERI INDUSTRIAL 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 SERI INDUSTRIAL and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SERI INDUSTRIAL EO and British American Tobacco, you can compare the effects of market volatilities on SERI INDUSTRIAL 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 SERI INDUSTRIAL with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and British American.
Diversification Opportunities for SERI INDUSTRIAL and British American
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SERI and British is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO 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 SERI INDUSTRIAL 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 SERI INDUSTRIAL EO 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 SERI INDUSTRIAL i.e., SERI INDUSTRIAL and British American go up and down completely randomly.
Pair Corralation between SERI INDUSTRIAL and British American
Assuming the 90 days trading horizon SERI INDUSTRIAL is expected to generate 37.39 times less return on investment than British American. In addition to that, SERI INDUSTRIAL is 6.36 times more volatile than British American Tobacco. It trades about 0.0 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.43 per unit of volatility. If you would invest 3,314 in British American Tobacco on September 13, 2024 and sell it today you would earn a total of 285.00 from holding British American Tobacco or generate 8.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SERI INDUSTRIAL EO vs. British American Tobacco
Performance |
| Timeline |
| SERI INDUSTRIAL EO |
| British American Tobacco |
SERI INDUSTRIAL and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SERI INDUSTRIAL and British American
The main advantage of trading using opposite SERI INDUSTRIAL and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERI INDUSTRIAL 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.| SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc |
| British American vs. Electronic Arts | British American vs. PKSHA TECHNOLOGY INC | British American vs. KIMBALL ELECTRONICS | British American vs. FANDIFI TECHNOLOGY P |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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