Correlation Between Cass Saddle and BRITISH AMERICAN

Can any of the company-specific risk be diversified away by investing in both Cass Saddle 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 Cass Saddle and BRITISH AMERICAN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cass Saddle Agriculture and BRITISH AMERICAN TOBACCO, you can compare the effects of market volatilities on Cass Saddle 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 Cass Saddle with a short position of BRITISH AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Saddle and BRITISH AMERICAN.

Diversification Opportunities for Cass Saddle and BRITISH AMERICAN

-0.3

Correlation Coefficient

Cass Saddle  BRITISH AMERICAN

Very good diversification

The 3 months correlation between Cass and BRITISH is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cass Saddle Agriculture 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 Cass Saddle 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 Cass Saddle Agriculture 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 Cass Saddle i.e., Cass Saddle and BRITISH AMERICAN go up and down completely randomly.

Pair Corralation between Cass Saddle and BRITISH AMERICAN

If you would invest  803,600  in BRITISH AMERICAN TOBACCO on October 27, 2024 and sell it today you would earn a total of  186,400  from holding BRITISH AMERICAN TOBACCO or generate 23.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cass Saddle Agriculture  vs.  BRITISH AMERICAN TOBACCO

Cass Saddle Agriculture

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cass Saddle Agriculture are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Cass Saddle showed solid returns over the last few months and may actually be approaching a breakup point.

BRITISH AMERICAN TOBACCO

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BRITISH AMERICAN TOBACCO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, BRITISH AMERICAN demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cass Saddle and BRITISH AMERICAN

The main advantage of trading using opposite Cass Saddle and BRITISH AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Saddle 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.

The idea behind Cass Saddle Agriculture and BRITISH AMERICAN TOBACCO 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..