Correlation Between British Amer and City Lodge
Can any of the company-specific risk be diversified away by investing in both British Amer and City Lodge 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 Amer and City Lodge 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 City Lodge Hotels, you can compare the effects of market volatilities on British Amer and City Lodge 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 Amer with a short position of City Lodge. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and City Lodge.
Diversification Opportunities for British Amer and City Lodge
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between British and City is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and City Lodge Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Lodge Hotels and British Amer 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 City Lodge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Lodge Hotels has no effect on the direction of British Amer i.e., British Amer and City Lodge go up and down completely randomly.
Pair Corralation between British Amer and City Lodge
Assuming the 90 days trading horizon British American Tobacco is expected to generate 1.05 times more return on investment than City Lodge. However, British Amer is 1.05 times more volatile than City Lodge Hotels. It trades about 0.12 of its potential returns per unit of risk. City Lodge Hotels is currently generating about -0.23 per unit of risk. If you would invest 6,632,849 in British American Tobacco on December 30, 2024 and sell it today you would earn a total of 814,751 from holding British American Tobacco or generate 12.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
British American Tobacco vs. City Lodge Hotels
Performance |
Timeline |
British American Tobacco |
City Lodge Hotels |
British Amer and City Lodge Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with British Amer and City Lodge
The main advantage of trading using opposite British Amer and City Lodge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, City Lodge 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 City Lodge will offset losses from the drop in City Lodge's long position.British Amer vs. RCL Foods | British Amer vs. HomeChoice Investments | British Amer vs. Reinet Investments SCA | British Amer vs. Standard Bank Group |
City Lodge vs. Reinet Investments SCA | City Lodge vs. Astoria Investments | City Lodge vs. RCL Foods | City Lodge vs. Frontier Transport Holdings |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |