Correlation Between PLAYMATES TOYS and Relx PLC
Can any of the company-specific risk be diversified away by investing in both PLAYMATES TOYS and Relx PLC 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 PLAYMATES TOYS and Relx PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLAYMATES TOYS and Relx PLC ADR, you can compare the effects of market volatilities on PLAYMATES TOYS and Relx PLC 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 PLAYMATES TOYS with a short position of Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYMATES TOYS and Relx PLC.
Diversification Opportunities for PLAYMATES TOYS and Relx PLC
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PLAYMATES and Relx is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR and PLAYMATES TOYS 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 PLAYMATES TOYS are associated (or correlated) with Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of PLAYMATES TOYS i.e., PLAYMATES TOYS and Relx PLC go up and down completely randomly.
Pair Corralation between PLAYMATES TOYS and Relx PLC
Assuming the 90 days trading horizon PLAYMATES TOYS is expected to generate 1.78 times less return on investment than Relx PLC. In addition to that, PLAYMATES TOYS is 4.86 times more volatile than Relx PLC ADR. It trades about 0.01 of its total potential returns per unit of risk. Relx PLC ADR is currently generating about 0.12 per unit of volatility. If you would invest 4,440 in Relx PLC ADR on October 28, 2024 and sell it today you would earn a total of 200.00 from holding Relx PLC ADR or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLAYMATES TOYS vs. Relx PLC ADR
Performance |
| Timeline |
| PLAYMATES TOYS |
| Relx PLC ADR |
PLAYMATES TOYS and Relx PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLAYMATES TOYS and Relx PLC
The main advantage of trading using opposite PLAYMATES TOYS and Relx PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYMATES TOYS position performs unexpectedly, Relx PLC 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 Relx PLC will offset losses from the drop in Relx PLC's long position.| PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc |
| Relx PLC vs. RELX PLC | Relx PLC vs. Wolters Kluwer NV | Relx PLC vs. WOLTERS KLUWER ADR | Relx PLC vs. Informa PLC |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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