Correlation Between TRAINLINE PLC and Pick N
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and Pick N 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 Pick N 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 Pick n Pay, you can compare the effects of market volatilities on TRAINLINE PLC and Pick N 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 Pick N. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and Pick N.
Diversification Opportunities for TRAINLINE PLC and Pick N
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TRAINLINE and Pick is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and Pick n Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick n Pay 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 Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick n Pay has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and Pick N go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and Pick N
Assuming the 90 days trading horizon TRAINLINE PLC is expected to generate 2.09 times less return on investment than Pick N. In addition to that, TRAINLINE PLC is 1.13 times more volatile than Pick n Pay. It trades about 0.1 of its total potential returns per unit of risk. Pick n Pay is currently generating about 0.24 per unit of volatility. If you would invest 136.00 in Pick n Pay on September 4, 2024 and sell it today you would earn a total of 19.00 from holding Pick n Pay or generate 13.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
TRAINLINE PLC LS vs. Pick n Pay
Performance |
| Timeline |
| TRAINLINE PLC LS |
| Pick n Pay |
TRAINLINE PLC and Pick N Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAINLINE PLC and Pick N
The main advantage of trading using opposite TRAINLINE PLC and Pick N positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC position performs unexpectedly, Pick N 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 Pick N will offset losses from the drop in Pick N's long position.| TRAINLINE PLC vs. TRIPCOM GROUP DL 00125 | TRAINLINE PLC vs. TUI AG | TRAINLINE PLC vs. TripAdvisor | TRAINLINE PLC vs. ON THE BEACH |
| Pick N vs. GOLD ROAD RES | Pick N vs. PARKEN Sport Entertainment | Pick N vs. TRAINLINE PLC LS | Pick N vs. Fukuyama Transporting Co |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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