Correlation Between Pyxus International and British Amer

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

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

Diversification Opportunities for Pyxus International and British Amer

-0.1

Correlation Coefficient

Pyxus International  British Amer

Good diversification

The 3 months correlation between Pyxus and British is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Pyxus International 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 Pyxus International 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 Pyxus International are associated (or correlated) with British Amer. 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 Pyxus International i.e., Pyxus International and British Amer go up and down completely randomly.

Pair Corralation between Pyxus International and British Amer

Given the investment horizon of 90 days Pyxus International is expected to generate 11.09 times more return on investment than British Amer. However, Pyxus International is 11.09 times more volatile than British American Tobacco. It trades about 0.01 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.0 per unit of risk. If you would invest  299.00  in Pyxus International on September 22, 2024 and sell it today you would lose (69.00) from holding Pyxus International or give up 23.08% of portfolio value over 90 days.

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

Pyxus International  vs.  British American Tobacco

Pyxus International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pyxus International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Pyxus International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

British American Tobacco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days British American Tobacco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, British Amer is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Pyxus International and British Amer

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

The idea behind Pyxus International 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.