Correlation Between Rex Trueform and British Amer
Can any of the company-specific risk be diversified away by investing in both Rex Trueform and British Amer 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 Rex Trueform and British Amer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rex Trueform Group and British American Tobacco, you can compare the effects of market volatilities on Rex Trueform and British Amer 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 Rex Trueform with a short position of British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rex Trueform and British Amer.
Diversification Opportunities for Rex Trueform and British Amer
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rex and British is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Rex Trueform Group 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 Rex Trueform 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 Rex Trueform Group are associated (or correlated) with British Amer. 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 Rex Trueform i.e., Rex Trueform and British Amer go up and down completely randomly.
Pair Corralation between Rex Trueform and British Amer
Assuming the 90 days trading horizon Rex Trueform Group is expected to under-perform the British Amer. But the stock apears to be less risky and, when comparing its historical volatility, Rex Trueform Group is 4.99 times less risky than British Amer. The stock trades about -0.12 of its potential returns per unit of risk. The British American Tobacco is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest 6,079,500 in British American Tobacco on August 31, 2024 and sell it today you would earn a total of 751,500 from holding British American Tobacco or generate 12.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Rex Trueform Group vs. British American Tobacco
Performance |
| Timeline |
| Rex Trueform Group |
| British American Tobacco |
Rex Trueform and British Amer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rex Trueform and British Amer
The main advantage of trading using opposite Rex Trueform and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rex Trueform position performs unexpectedly, British Amer 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 Amer will offset losses from the drop in British Amer's long position.| Rex Trueform vs. British American Tobacco | Rex Trueform vs. E Media Holdings | Rex Trueform vs. HomeChoice Investments | Rex Trueform vs. Standard Bank Group |
| British Amer vs. Centaur Bci Balanced | British Amer vs. Sabvest Capital | British Amer vs. AfricaRhodium ETF | British Amer vs. Indexco Limited |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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