Correlation Between British American and Marwyn Value

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both British American and Marwyn Value 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 British American and Marwyn Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Marwyn Value Investors, you can compare the effects of market volatilities on British American and Marwyn Value 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 British American with a short position of Marwyn Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Marwyn Value.

Diversification Opportunities for British American and Marwyn Value

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between British and Marwyn is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Marwyn Value Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marwyn Value Investors and British American 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 British American Tobacco are associated (or correlated) with Marwyn Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marwyn Value Investors has no effect on the direction of British American i.e., British American and Marwyn Value go up and down completely randomly.

Pair Corralation between British American and Marwyn Value

Assuming the 90 days trading horizon British American Tobacco is expected to under-perform the Marwyn Value. But the stock apears to be less risky and, when comparing its historical volatility, British American Tobacco is 1.29 times less risky than Marwyn Value. The stock trades about -0.07 of its potential returns per unit of risk. The Marwyn Value Investors is currently generating about 0.61 of returns per unit of risk over similar time horizon. If you would invest  8,600  in Marwyn Value Investors on October 11, 2024 and sell it today you would earn a total of  1,450  from holding Marwyn Value Investors or generate 16.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.0%
ValuesDaily Returns

British American Tobacco  vs.  Marwyn Value Investors

 Performance 
       Timeline  
British American Tobacco 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in British American Tobacco are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, British American may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Marwyn Value Investors 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Marwyn Value Investors are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Marwyn Value exhibited solid returns over the last few months and may actually be approaching a breakup point.

British American and Marwyn Value Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with British American and Marwyn Value

The main advantage of trading using opposite British American and Marwyn Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Marwyn Value 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 Marwyn Value will offset losses from the drop in Marwyn Value's long position.
The idea behind British American Tobacco and Marwyn Value Investors pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

Other Complementary Tools

Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Commodity Channel
Use Commodity Channel Index to analyze current equity momentum
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments