Correlation Between Brpr Corporate and British American

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

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

Diversification Opportunities for Brpr Corporate and British American

-0.52

Correlation Coefficient

Brpr Corporate  British American

Excellent diversification

The 3 months correlation between Brpr and British is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Brpr Corporate Offices 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 Brpr Corporate 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 Brpr Corporate Offices 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 Brpr Corporate i.e., Brpr Corporate and British American go up and down completely randomly.

Pair Corralation between Brpr Corporate and British American

Assuming the 90 days trading horizon Brpr Corporate Offices is expected to under-perform the British American. But the stock apears to be less risky and, when comparing its historical volatility, Brpr Corporate Offices is 1.25 times less risky than British American. The stock trades about -0.03 of its potential returns per unit of risk. The British American Tobacco is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,723  in British American Tobacco on September 24, 2024 and sell it today you would earn a total of  689.00  from holding British American Tobacco or generate 18.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.2%
Values	Daily Returns

Brpr Corporate Offices  vs.  British American Tobacco

Brpr Corporate Offices

Risk-Adjusted Performance

0 of 100

Very Weak

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

British American Tobacco

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in British American Tobacco are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, British American may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brpr Corporate and British American

The main advantage of trading using opposite Brpr Corporate and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brpr Corporate 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 Brpr Corporate Offices 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.