Correlation Between British Amer and Imperial Brands
Can any of the company-specific risk be diversified away by investing in both British Amer and Imperial Brands 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 Amer and Imperial Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Imperial Brands PLC, you can compare the effects of market volatilities on British Amer and Imperial Brands 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 Amer with a short position of Imperial Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Imperial Brands.
Diversification Opportunities for British Amer and Imperial Brands
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between British and Imperial is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Imperial Brands PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Brands PLC and British Amer 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 American Tobacco are associated (or correlated) with Imperial Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Brands PLC has no effect on the direction of British Amer i.e., British Amer and Imperial Brands go up and down completely randomly.
Pair Corralation between British Amer and Imperial Brands
Considering the 90-day investment horizon British American Tobacco is expected to generate 0.84 times more return on investment than Imperial Brands. However, British American Tobacco is 1.19 times less risky than Imperial Brands. It trades about 0.29 of its potential returns per unit of risk. Imperial Brands PLC is currently generating about -0.04 per unit of risk. If you would invest 4,376 in British American Tobacco on May 7, 2025 and sell it today you would earn a total of 1,208 from holding British American Tobacco or generate 27.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
British American Tobacco vs. Imperial Brands PLC
Performance |
Timeline |
British American Tobacco |
Imperial Brands PLC |
British Amer and Imperial Brands Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with British Amer and Imperial Brands
The main advantage of trading using opposite British Amer and Imperial Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Imperial Brands 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 Imperial Brands will offset losses from the drop in Imperial Brands' long position.British Amer vs. Altria Group | British Amer vs. Philip Morris International | British Amer vs. Imperial Brands PLC | British Amer vs. Universal |
Imperial Brands vs. Japan Tobacco ADR | Imperial Brands vs. Turning Point Brands | Imperial Brands vs. British American Tobacco | Imperial Brands vs. Imperial Brands PLC |
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 the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Global Correlations Find global opportunities by holding instruments from different markets | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |