Correlation Between OTP Bank and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both OTP Bank and Fevertree Drinks 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 OTP Bank and Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OTP Bank Nyrt and Fevertree Drinks Plc, you can compare the effects of market volatilities on OTP Bank and Fevertree Drinks 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 OTP Bank with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of OTP Bank and Fevertree Drinks.
Diversification Opportunities for OTP Bank and Fevertree Drinks
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between OTP and Fevertree is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks Plc and OTP Bank 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 OTP Bank Nyrt are associated (or correlated) with Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of OTP Bank i.e., OTP Bank and Fevertree Drinks go up and down completely randomly.
Pair Corralation between OTP Bank and Fevertree Drinks
Assuming the 90 days trading horizon OTP Bank Nyrt is expected to generate 11.4 times more return on investment than Fevertree Drinks. However, OTP Bank is 11.4 times more volatile than Fevertree Drinks Plc. It trades about 0.09 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.07 per unit of risk. If you would invest 1,259,000 in OTP Bank Nyrt on October 29, 2024 and sell it today you would earn a total of 0.00 from holding OTP Bank Nyrt or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OTP Bank Nyrt vs. Fevertree Drinks Plc
Performance |
| Timeline |
| OTP Bank Nyrt |
| Fevertree Drinks Plc |
OTP Bank and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OTP Bank and Fevertree Drinks
The main advantage of trading using opposite OTP Bank and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OTP Bank position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| OTP Bank vs. Batm Advanced Communications | OTP Bank vs. Charter Communications Cl | OTP Bank vs. JD Sports Fashion | OTP Bank vs. Pressure Technologies Plc |
| Fevertree Drinks vs. Electronic Arts | Fevertree Drinks vs. Prosiebensat 1 Media | Fevertree Drinks vs. Nordic Semiconductor ASA | Fevertree Drinks vs. LBG Media 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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