Correlation Between Cembra Money and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Cembra Money and DFS Furniture 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 Cembra Money and DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cembra Money Bank and DFS Furniture PLC, you can compare the effects of market volatilities on Cembra Money and DFS Furniture 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 Cembra Money with a short position of DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cembra Money and DFS Furniture.
Diversification Opportunities for Cembra Money and DFS Furniture
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cembra and DFS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC and Cembra Money 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 Cembra Money Bank are associated (or correlated) with DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Cembra Money i.e., Cembra Money and DFS Furniture go up and down completely randomly.
Pair Corralation between Cembra Money and DFS Furniture
Assuming the 90 days trading horizon Cembra Money Bank is expected to generate 0.56 times more return on investment than DFS Furniture. However, Cembra Money Bank is 1.8 times less risky than DFS Furniture. It trades about 0.03 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.01 per unit of risk. If you would invest 7,110 in Cembra Money Bank on September 26, 2024 and sell it today you would earn a total of 1,045 from holding Cembra Money Bank or generate 14.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Cembra Money Bank vs. DFS Furniture PLC
Performance |
| Timeline |
| Cembra Money Bank |
| DFS Furniture PLC |
Cembra Money and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cembra Money and DFS Furniture
The main advantage of trading using opposite Cembra Money and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cembra Money position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Cembra Money vs. Park Hotels Resorts | Cembra Money vs. Lindsell Train Investment | Cembra Money vs. PPHE Hotel Group | Cembra Money vs. Air Products Chemicals |
| DFS Furniture vs. UNIQA Insurance Group | DFS Furniture vs. Ameriprise Financial | DFS Furniture vs. Symphony Environmental Technologies | DFS Furniture vs. Cembra Money Bank |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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