Correlation Between 22nd Century and British American
Can any of the company-specific risk be diversified away by investing in both 22nd Century 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 22nd Century and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 22nd Century Group and British American Tobacco, you can compare the effects of market volatilities on 22nd Century 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 22nd Century with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of 22nd Century and British American.
Diversification Opportunities for 22nd Century and British American
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 22nd and British is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding 22nd Century 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 22nd Century 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 22nd Century Group 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 22nd Century i.e., 22nd Century and British American go up and down completely randomly.
Pair Corralation between 22nd Century and British American
Given the investment horizon of 90 days 22nd Century Group is expected to under-perform the British American. In addition to that, 22nd Century is 3.68 times more volatile than British American Tobacco. It trades about -0.1 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.2 per unit of volatility. If you would invest 3,421 in British American Tobacco on August 28, 2024 and sell it today you would earn a total of 285.00 from holding British American Tobacco or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
22nd Century Group vs. British American Tobacco
Performance |
| Timeline |
| 22nd Century Group |
| British American Tobacco |
22nd Century and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 22nd Century and British American
The main advantage of trading using opposite 22nd Century and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 22nd Century 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.| 22nd Century vs. Turning Point Brands | 22nd Century vs. Green Globe International | 22nd Century vs. Imperial Brands PLC | 22nd Century vs. Kaival Brands Innovations |
| British American vs. Imperial Brands PLC | British American vs. RLX Technology | British American vs. British American Tobacco | British American vs. Turning Point Brands |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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