Correlation Between TMT Investments and Bankers Investment
Can any of the company-specific risk be diversified away by investing in both TMT Investments and Bankers Investment 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 TMT Investments and Bankers Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMT Investments PLC and Bankers Investment Trust, you can compare the effects of market volatilities on TMT Investments and Bankers Investment 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 TMT Investments with a short position of Bankers Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMT Investments and Bankers Investment.
Diversification Opportunities for TMT Investments and Bankers Investment
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TMT and Bankers is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding TMT Investments PLC and Bankers Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankers Investment Trust and TMT Investments 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 TMT Investments PLC are associated (or correlated) with Bankers Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankers Investment Trust has no effect on the direction of TMT Investments i.e., TMT Investments and Bankers Investment go up and down completely randomly.
Pair Corralation between TMT Investments and Bankers Investment
Assuming the 90 days trading horizon TMT Investments is expected to generate 2.11 times less return on investment than Bankers Investment. In addition to that, TMT Investments is 4.68 times more volatile than Bankers Investment Trust. It trades about 0.04 of its total potential returns per unit of risk. Bankers Investment Trust is currently generating about 0.37 per unit of volatility. If you would invest 11,180 in Bankers Investment Trust on September 3, 2024 and sell it today you would earn a total of 460.00 from holding Bankers Investment Trust or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TMT Investments PLC vs. Bankers Investment Trust
Performance |
| Timeline |
| TMT Investments PLC |
| Bankers Investment Trust |
TMT Investments and Bankers Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMT Investments and Bankers Investment
The main advantage of trading using opposite TMT Investments and Bankers Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMT Investments position performs unexpectedly, Bankers Investment 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 Bankers Investment will offset losses from the drop in Bankers Investment's long position.| TMT Investments vs. Telecom Italia SpA | TMT Investments vs. Spirent Communications plc | TMT Investments vs. HCA Healthcare | TMT Investments vs. Batm Advanced Communications |
| Bankers Investment vs. Verizon Communications | Bankers Investment vs. JD Sports Fashion | Bankers Investment vs. Silvercorp Metals | Bankers Investment vs. Gaztransport et Technigaz |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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