Correlation Between Tootsie Roll and British Amer
Can any of the company-specific risk be diversified away by investing in both Tootsie Roll 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 Tootsie Roll and British Amer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tootsie Roll Industries and British American Tobacco, you can compare the effects of market volatilities on Tootsie Roll 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 Tootsie Roll with a short position of British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tootsie Roll and British Amer.
Diversification Opportunities for Tootsie Roll and British Amer
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tootsie and British is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tootsie Roll Industries 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 Tootsie Roll 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 Tootsie Roll Industries 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 Tootsie Roll i.e., Tootsie Roll and British Amer go up and down completely randomly.
Pair Corralation between Tootsie Roll and British Amer
Allowing for the 90-day total investment horizon Tootsie Roll Industries is expected to under-perform the British Amer. In addition to that, Tootsie Roll is 1.24 times more volatile than British American Tobacco. It trades about -0.03 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.01 per unit of volatility. If you would invest 3,563 in British American Tobacco on August 24, 2024 and sell it today you would earn a total of 175.00 from holding British American Tobacco or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tootsie Roll Industries vs. British American Tobacco
Performance |
| Timeline |
| Tootsie Roll Industries |
| British American Tobacco |
Tootsie Roll and British Amer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tootsie Roll and British Amer
The main advantage of trading using opposite Tootsie Roll and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tootsie Roll 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.| Tootsie Roll vs. Mondelez International | Tootsie Roll vs. Hershey Co | Tootsie Roll vs. Rocky Mountain Chocolate | Tootsie Roll vs. Chocoladefabriken Lindt Sprngli |
| British Amer vs. Universal | British Amer vs. Imperial Brands PLC | British Amer vs. Philip Morris International | British Amer vs. Japan Tobacco ADR |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |