Correlation Between Vastned Retail and BRIT AMER

Can any of the company-specific risk be diversified away by investing in both Vastned Retail and BRIT 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 Vastned Retail and BRIT AMER into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vastned Retail NV and BRIT AMER TOBACCO, you can compare the effects of market volatilities on Vastned Retail and BRIT 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 Vastned Retail with a short position of BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vastned Retail and BRIT AMER.

Diversification Opportunities for Vastned Retail and BRIT AMER

-0.08

Correlation Coefficient

Vastned Retail  BRIT AMER

Good diversification

The 3 months correlation between Vastned and BRIT is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Vastned Retail NV and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO and Vastned Retail 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 Vastned Retail NV are associated (or correlated) with BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of Vastned Retail i.e., Vastned Retail and BRIT AMER go up and down completely randomly.

Pair Corralation between Vastned Retail and BRIT AMER

Assuming the 90 days horizon Vastned Retail NV is expected to under-perform the BRIT AMER. But the stock apears to be less risky and, when comparing its historical volatility, Vastned Retail NV is 1.53 times less risky than BRIT AMER. The stock trades about -0.15 of its potential returns per unit of risk. The BRIT AMER TOBACCO is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  3,333  in BRIT AMER TOBACCO on September 14, 2024 and sell it today you would earn a total of  290.00  from holding BRIT AMER TOBACCO or generate 8.7% return on investment over 90 days.

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

Vastned Retail NV  vs.  BRIT AMER TOBACCO

Vastned Retail NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vastned Retail NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vastned Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BRIT AMER TOBACCO

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BRIT AMER TOBACCO are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BRIT AMER is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vastned Retail and BRIT AMER

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

The idea behind Vastned Retail NV and BRIT AMER 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.