Correlation Between Roper Technologies and Shell Plc
Can any of the company-specific risk be diversified away by investing in both Roper Technologies and Shell 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 Roper Technologies and Shell Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roper Technologies and Shell plc, you can compare the effects of market volatilities on Roper Technologies and Shell 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 Roper Technologies with a short position of Shell Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roper Technologies and Shell Plc.
Diversification Opportunities for Roper Technologies and Shell Plc
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Roper and Shell is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Roper Technologies and Shell plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell plc and Roper Technologies 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 Roper Technologies are associated (or correlated) with Shell Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell plc has no effect on the direction of Roper Technologies i.e., Roper Technologies and Shell Plc go up and down completely randomly.
Pair Corralation between Roper Technologies and Shell Plc
Assuming the 90 days trading horizon Roper Technologies is expected to generate 1.51 times more return on investment than Shell Plc. However, Roper Technologies is 1.51 times more volatile than Shell plc. It trades about 0.19 of its potential returns per unit of risk. Shell plc is currently generating about -0.1 per unit of risk. If you would invest 54,042 in Roper Technologies on September 2, 2024 and sell it today you would earn a total of 2,721 from holding Roper Technologies or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roper Technologies vs. Shell plc
Performance |
| Timeline |
| Roper Technologies |
| Shell plc |
Roper Technologies and Shell Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roper Technologies and Shell Plc
The main advantage of trading using opposite Roper Technologies and Shell Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roper Technologies position performs unexpectedly, Shell 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 Shell Plc will offset losses from the drop in Shell Plc's long position.| Roper Technologies vs. Pets at Home | Roper Technologies vs. Universal Display Corp | Roper Technologies vs. Mindflair Plc | Roper Technologies vs. DFS Furniture PLC |
| Shell Plc vs. Made Tech Group | Shell Plc vs. DXC Technology Co | Shell Plc vs. LBG Media PLC | Shell Plc vs. Roper Technologies |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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