Correlation Between Tres Tentos and British American
Can any of the company-specific risk be diversified away by investing in both Tres Tentos 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 Tres Tentos and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tres Tentos Agroindustrial and British American Tobacco, you can compare the effects of market volatilities on Tres Tentos 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 Tres Tentos with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tres Tentos and British American.
Diversification Opportunities for Tres Tentos and British American
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tres and British is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tres Tentos Agroindustrial 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 Tres Tentos 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 Tres Tentos Agroindustrial 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 Tres Tentos i.e., Tres Tentos and British American go up and down completely randomly.
Pair Corralation between Tres Tentos and British American
Assuming the 90 days trading horizon Tres Tentos Agroindustrial is expected to generate 0.93 times more return on investment than British American. However, Tres Tentos Agroindustrial is 1.08 times less risky than British American. It trades about 0.37 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.01 per unit of risk. If you would invest 1,389 in Tres Tentos Agroindustrial on November 18, 2024 and sell it today you would earn a total of 259.00 from holding Tres Tentos Agroindustrial or generate 18.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tres Tentos Agroindustrial vs. British American Tobacco
Performance |
| Timeline |
| Tres Tentos Agroindu |
| British American Tobacco |
Tres Tentos and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tres Tentos and British American
The main advantage of trading using opposite Tres Tentos and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tres Tentos 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.| Tres Tentos vs. Boa Safra Sementes | Tres Tentos vs. Ambipar Participaes e | Tres Tentos vs. Vamos Locao de | Tres Tentos vs. Petroreconcavo SA |
| British American vs. Pentair plc | British American vs. Warner Music Group | British American vs. Verizon Communications | British American vs. Ryanair Holdings plc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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