Correlation Between TRAINLINE PLC and PGE
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and PGE 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 TRAINLINE PLC and PGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and PGE Corporation, you can compare the effects of market volatilities on TRAINLINE PLC and PGE 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 TRAINLINE PLC with a short position of PGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and PGE.
Diversification Opportunities for TRAINLINE PLC and PGE
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TRAINLINE and PGE is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and PGE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corporation and TRAINLINE PLC 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 TRAINLINE PLC LS are associated (or correlated) with PGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGE Corporation has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and PGE go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and PGE
Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to generate 2.02 times more return on investment than PGE. However, TRAINLINE PLC is 2.02 times more volatile than PGE Corporation. It trades about 0.04 of its potential returns per unit of risk. PGE Corporation is currently generating about 0.06 per unit of risk. If you would invest 342.00 in TRAINLINE PLC LS on September 2, 2024 and sell it today you would earn a total of 142.00 from holding TRAINLINE PLC LS or generate 41.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRAINLINE PLC LS vs. PGE Corp.
Performance |
| Timeline |
| TRAINLINE PLC LS |
| PGE Corporation |
TRAINLINE PLC and PGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAINLINE PLC and PGE
The main advantage of trading using opposite TRAINLINE PLC and PGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC position performs unexpectedly, PGE 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 PGE will offset losses from the drop in PGE's long position.| TRAINLINE PLC vs. Ramsay Health Care | TRAINLINE PLC vs. North American Construction | TRAINLINE PLC vs. Granite Construction | TRAINLINE PLC vs. Titan Machinery |
| PGE vs. National Health Investors | PGE vs. Jupiter Fund Management | PGE vs. Q2M Managementberatung AG | PGE vs. Cardinal Health |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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