Correlation Between British American and Carsales
Can any of the company-specific risk be diversified away by investing in both British American and Carsales 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 Carsales 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 Carsales, you can compare the effects of market volatilities on British American and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Carsales.
Diversification Opportunities for British American and Carsales
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between British and Carsales is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsales has no effect on the direction of British American i.e., British American and Carsales go up and down completely randomly.
Pair Corralation between British American and Carsales
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.81 times more return on investment than Carsales. However, British American Tobacco is 1.23 times less risky than Carsales. It trades about 0.05 of its potential returns per unit of risk. Carsales is currently generating about -0.09 per unit of risk. If you would invest 3,509 in British American Tobacco on November 22, 2024 and sell it today you would earn a total of 154.00 from holding British American Tobacco or generate 4.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
British American Tobacco vs. Carsales
Performance |
Timeline |
British American Tobacco |
Carsales |
British American and Carsales Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with British American and Carsales
The main advantage of trading using opposite British American and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.British American vs. H2O Retailing | ||
British American vs. TRADELINK ELECTRON | ||
British American vs. Gladstone Investment | ||
British American vs. Salesforce |
Carsales vs. TELECOM ITALIA | ||
Carsales vs. Q2M Managementberatung AG | ||
Carsales vs. Ares Management Corp | ||
Carsales vs. Comba Telecom Systems |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Transaction History View history of all your transactions and understand their impact on performance | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |