Correlation Between Pure Storage, and British American
Can any of the company-specific risk be diversified away by investing in both Pure Storage, 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 Pure Storage, and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Storage, and British American Tobacco, you can compare the effects of market volatilities on Pure Storage, 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 Pure Storage, with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Storage, and British American.
Diversification Opportunities for Pure Storage, and British American
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pure and British is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage, 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 Pure Storage, 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 Pure Storage, 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 Pure Storage, i.e., Pure Storage, and British American go up and down completely randomly.
Pair Corralation between Pure Storage, and British American
Assuming the 90 days trading horizon Pure Storage, is expected to generate 1.81 times more return on investment than British American. However, Pure Storage, is 1.81 times more volatile than British American Tobacco. It trades about 0.16 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.09 per unit of risk. If you would invest 7,539 in Pure Storage, on October 25, 2024 and sell it today you would earn a total of 3,230 from holding Pure Storage, or generate 42.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Pure Storage, vs. British American Tobacco
Performance |
Timeline |
Pure Storage, |
British American Tobacco |
Pure Storage, and British American Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pure Storage, and British American
The main advantage of trading using opposite Pure Storage, and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage, 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.Pure Storage, vs. Unifique Telecomunicaes SA | Pure Storage, vs. G2D Investments | Pure Storage, vs. Nordon Indstrias Metalrgicas | Pure Storage, vs. METISA Metalrgica Timboense |
British American vs. Citizens Financial Group, | British American vs. MAHLE Metal Leve | British American vs. TAL Education Group | British American vs. Nordon Indstrias Metalrgicas |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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