Correlation Between British Land and Fibra UNO

Can any of the company-specific risk be diversified away by investing in both British Land and Fibra UNO 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 Land and Fibra UNO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between British Land and Fibra UNO, you can compare the effects of market volatilities on British Land and Fibra UNO 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 Land with a short position of Fibra UNO. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Land and Fibra UNO.

Diversification Opportunities for British Land and Fibra UNO

-0.18

Correlation Coefficient

British Land  Fibra UNO

Good diversification

The 3 months correlation between British and Fibra is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding British Land and Fibra UNO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra UNO and British Land 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 Land are associated (or correlated) with Fibra UNO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra UNO has no effect on the direction of British Land i.e., British Land and Fibra UNO go up and down completely randomly.

Pair Corralation between British Land and Fibra UNO

Assuming the 90 days horizon British Land is expected to generate 1.0 times more return on investment than Fibra UNO. However, British Land is 1.0 times more volatile than Fibra UNO. It trades about 0.1 of its potential returns per unit of risk. Fibra UNO is currently generating about -0.05 per unit of risk. If you would invest  482.00  in British Land on September 2, 2024 and sell it today you would earn a total of  87.00  from holding British Land or generate 18.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

British Land  vs.  Fibra UNO

British Land

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in British Land are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, British Land reported solid returns over the last few months and may actually be approaching a breakup point.

Fibra UNO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fibra UNO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with British Land and Fibra UNO

The main advantage of trading using opposite British Land and Fibra UNO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Land position performs unexpectedly, Fibra UNO 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 Fibra UNO will offset losses from the drop in Fibra UNO's long position.

The idea behind British Land and Fibra UNO 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.