Correlation Between Cembra Money and DS Smith
Can any of the company-specific risk be diversified away by investing in both Cembra Money and DS Smith 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 DS Smith 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 DS Smith PLC, you can compare the effects of market volatilities on Cembra Money and DS Smith 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 DS Smith. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cembra Money and DS Smith.
Diversification Opportunities for Cembra Money and DS Smith
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cembra and SMDS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and DS Smith PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DS Smith 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 DS Smith. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DS Smith PLC has no effect on the direction of Cembra Money i.e., Cembra Money and DS Smith go up and down completely randomly.
Pair Corralation between Cembra Money and DS Smith
Assuming the 90 days trading horizon Cembra Money is expected to generate 2.16 times less return on investment than DS Smith. But when comparing it to its historical volatility, Cembra Money Bank is 2.03 times less risky than DS Smith. It trades about 0.11 of its potential returns per unit of risk. DS Smith PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 30,082 in DS Smith PLC on September 20, 2024 and sell it today you would earn a total of 24,318 from holding DS Smith PLC or generate 80.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Cembra Money Bank vs. DS Smith PLC
Performance |
| Timeline |
| Cembra Money Bank |
| DS Smith PLC |
Cembra Money and DS Smith Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cembra Money and DS Smith
The main advantage of trading using opposite Cembra Money and DS Smith positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cembra Money position performs unexpectedly, DS Smith 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 DS Smith will offset losses from the drop in DS Smith's long position.| Cembra Money vs. Foresight Environmental Infrastructure | Cembra Money vs. Symphony Environmental Technologies | Cembra Money vs. Silvercorp Metals | Cembra Money vs. Cornish Metals |
| DS Smith vs. Cembra Money Bank | DS Smith vs. National Beverage Corp | DS Smith vs. Sabre Insurance Group | DS Smith vs. Young Cos Brewery |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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