Correlation Between Aci Worldwide and British Amer

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Can any of the company-specific risk be diversified away by investing in both Aci Worldwide 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 Aci Worldwide and British Amer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aci Worldwide and British American Tobacco, you can compare the effects of market volatilities on Aci Worldwide 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 Aci Worldwide with a short position of British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aci Worldwide and British Amer.

Diversification Opportunities for Aci Worldwide and British Amer

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Aci Worldwide and British is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Aci Worldwide 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 Aci Worldwide 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 Aci Worldwide 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 Aci Worldwide i.e., Aci Worldwide and British Amer go up and down completely randomly.

Pair Corralation between Aci Worldwide and British Amer

Given the investment horizon of 90 days Aci Worldwide is expected to under-perform the British Amer. In addition to that, Aci Worldwide is 1.54 times more volatile than British American Tobacco. It trades about -0.06 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.04 per unit of volatility. If you would invest  3,478  in British American Tobacco on August 28, 2022 and sell it today you would earn a total of  582.00  from holding British American Tobacco or generate 16.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Aci Worldwide  vs.  British American Tobacco

 Performance (%) 
       Timeline  
Aci Worldwide 
Aci Worldwide Performance
0 of 100
Over the last 90 days Aci Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's forward indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Aci Worldwide Price Channel

British American Tobacco 
British Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in British American Tobacco are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, British Amer is not utilizing all of its potentials. The new stock price disturbance, may contribute to mid-run losses for the stockholders.

British Price Channel

Aci Worldwide and British Amer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aci Worldwide and British Amer

The main advantage of trading using opposite Aci Worldwide and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aci Worldwide 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.
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The idea behind Aci Worldwide 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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