Correlation Between Corporate Office and British American
Can any of the company-specific risk be diversified away by investing in both Corporate Office 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 Corporate Office and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and British American Tobacco, you can compare the effects of market volatilities on Corporate Office 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 Corporate Office with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and British American.
Diversification Opportunities for Corporate Office and British American
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Corporate and British is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties 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 Corporate Office 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 Corporate Office Properties 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 Corporate Office i.e., Corporate Office and British American go up and down completely randomly.
Pair Corralation between Corporate Office and British American
Assuming the 90 days horizon Corporate Office is expected to generate 1.98 times less return on investment than British American. In addition to that, Corporate Office is 1.24 times more volatile than British American Tobacco. It trades about 0.06 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.14 per unit of volatility. If you would invest 3,301 in British American Tobacco on November 2, 2024 and sell it today you would earn a total of 499.00 from holding British American Tobacco or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Office Properties vs. British American Tobacco
Performance |
| Timeline |
| Corporate Office Pro |
| British American Tobacco |
Corporate Office and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and British American
The main advantage of trading using opposite Corporate Office and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office 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.| Corporate Office vs. NorAm Drilling AS | Corporate Office vs. Zijin Mining Group | Corporate Office vs. STGEORGE MINING LTD | Corporate Office vs. SERI INDUSTRIAL EO |
| British American vs. Air Transport Services | British American vs. Aluminum of | British American vs. Apollo Investment Corp | British American vs. FIREWEED METALS 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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