Correlation Between Cembra Money and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Cembra Money 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 Cembra Money and Fevertree Drinks 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 Fevertree Drinks Plc, you can compare the effects of market volatilities on Cembra Money 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 Cembra Money with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cembra Money and Fevertree Drinks.
Diversification Opportunities for Cembra Money and Fevertree Drinks
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cembra and Fevertree is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank 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 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 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 Cembra Money i.e., Cembra Money and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Cembra Money and Fevertree Drinks
Assuming the 90 days trading horizon Cembra Money Bank is expected to generate 0.48 times more return on investment than Fevertree Drinks. However, Cembra Money Bank is 2.08 times less risky than Fevertree Drinks. It trades about 0.23 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.16 per unit of risk. If you would invest 7,775 in Cembra Money Bank on September 1, 2024 and sell it today you would earn a total of 335.00 from holding Cembra Money Bank or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cembra Money Bank vs. Fevertree Drinks Plc
Performance |
| Timeline |
| Cembra Money Bank |
| Fevertree Drinks Plc |
Cembra Money and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cembra Money and Fevertree Drinks
The main advantage of trading using opposite Cembra Money and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cembra Money 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.| Cembra Money vs. Aeorema Communications Plc | Cembra Money vs. Panther Metals PLC | Cembra Money vs. Batm Advanced Communications | Cembra Money vs. Spirent Communications plc |
| Fevertree Drinks vs. SBM Offshore NV | Fevertree Drinks vs. Solstad Offshore ASA | Fevertree Drinks vs. Teradata Corp | Fevertree Drinks vs. Fidelity National Information |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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