Correlation Between Hershey and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Hershey and XLMedia PLC 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 Hershey and XLMedia PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hershey Co and XLMedia PLC, you can compare the effects of market volatilities on Hershey and XLMedia PLC 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 Hershey with a short position of XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hershey and XLMedia PLC.
Diversification Opportunities for Hershey and XLMedia PLC
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hershey and XLMedia is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hershey Co and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC and Hershey 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 Hershey Co are associated (or correlated) with XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Hershey i.e., Hershey and XLMedia PLC go up and down completely randomly.
Pair Corralation between Hershey and XLMedia PLC
Assuming the 90 days trading horizon Hershey Co is expected to under-perform the XLMedia PLC. But the stock apears to be less risky and, when comparing its historical volatility, Hershey Co is 2.18 times less risky than XLMedia PLC. The stock trades about -0.09 of its potential returns per unit of risk. The XLMedia PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 920.00 in XLMedia PLC on October 14, 2024 and sell it today you would earn a total of 15.00 from holding XLMedia PLC or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Hershey Co vs. XLMedia PLC
Performance |
| Timeline |
| Hershey |
| XLMedia PLC |
Hershey and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hershey and XLMedia PLC
The main advantage of trading using opposite Hershey and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hershey position performs unexpectedly, XLMedia PLC 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Hershey vs. Aberdeen Diversified Income | Hershey vs. Aeorema Communications Plc | Hershey vs. Lindsell Train Investment | Hershey vs. Verizon Communications |
| XLMedia PLC vs. Technicolor | XLMedia PLC vs. Liontrust Asset Management | XLMedia PLC vs. Concurrent Technologies Plc | XLMedia PLC vs. Made Tech Group |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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