Correlation Between Scandic Hotels and Mulberry Group
Can any of the company-specific risk be diversified away by investing in both Scandic Hotels and Mulberry Group 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 Scandic Hotels and Mulberry Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandic Hotels Group and Mulberry Group PLC, you can compare the effects of market volatilities on Scandic Hotels and Mulberry Group 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 Scandic Hotels with a short position of Mulberry Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandic Hotels and Mulberry Group.
Diversification Opportunities for Scandic Hotels and Mulberry Group
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandic and Mulberry is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group and Mulberry Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mulberry Group PLC and Scandic Hotels 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 Scandic Hotels Group are associated (or correlated) with Mulberry Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mulberry Group PLC has no effect on the direction of Scandic Hotels i.e., Scandic Hotels and Mulberry Group go up and down completely randomly.
Pair Corralation between Scandic Hotels and Mulberry Group
Assuming the 90 days trading horizon Scandic Hotels Group is expected to generate 0.44 times more return on investment than Mulberry Group. However, Scandic Hotels Group is 2.25 times less risky than Mulberry Group. It trades about 0.15 of its potential returns per unit of risk. Mulberry Group PLC is currently generating about -0.02 per unit of risk. If you would invest 6,573 in Scandic Hotels Group on November 28, 2024 and sell it today you would earn a total of 2,027 from holding Scandic Hotels Group or generate 30.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandic Hotels Group vs. Mulberry Group PLC
Performance |
| Timeline |
| Scandic Hotels Group |
| Mulberry Group PLC |
Scandic Hotels and Mulberry Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandic Hotels and Mulberry Group
The main advantage of trading using opposite Scandic Hotels and Mulberry Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandic Hotels position performs unexpectedly, Mulberry Group 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 Mulberry Group will offset losses from the drop in Mulberry Group's long position.| Scandic Hotels vs. Foresight Environmental Infrastructure | Scandic Hotels vs. Sabre Insurance Group | Scandic Hotels vs. Playtech Plc | Scandic Hotels vs. Taiwan Semiconductor Manufacturing |
| Mulberry Group vs. Sunny Optical Technology | Mulberry Group vs. Software Circle plc | Mulberry Group vs. Polar Capital Technology | Mulberry Group vs. EVS Broadcast Equipment |
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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