Correlation Between Associated British and Beeks Trading
Can any of the company-specific risk be diversified away by investing in both Associated British and Beeks Trading 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 Associated British and Beeks Trading into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Beeks Trading, you can compare the effects of market volatilities on Associated British and Beeks Trading 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 Associated British with a short position of Beeks Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Beeks Trading.
Diversification Opportunities for Associated British and Beeks Trading
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Associated and Beeks is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Beeks Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beeks Trading and Associated British 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 Associated British Foods are associated (or correlated) with Beeks Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beeks Trading has no effect on the direction of Associated British i.e., Associated British and Beeks Trading go up and down completely randomly.
Pair Corralation between Associated British and Beeks Trading
Assuming the 90 days trading horizon Associated British is expected to generate 8.7 times less return on investment than Beeks Trading. But when comparing it to its historical volatility, Associated British Foods is 2.19 times less risky than Beeks Trading. It trades about 0.01 of its potential returns per unit of risk. Beeks Trading is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 14,400 in Beeks Trading on November 2, 2024 and sell it today you would earn a total of 13,100 from holding Beeks Trading or generate 90.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Beeks Trading
Performance |
| Timeline |
| Associated British Foods |
| Beeks Trading |
Associated British and Beeks Trading Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Beeks Trading
The main advantage of trading using opposite Associated British and Beeks Trading positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Beeks Trading 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 Beeks Trading will offset losses from the drop in Beeks Trading's long position.| Associated British vs. MediaZest plc | Associated British vs. Sabre Insurance Group | Associated British vs. G5 Entertainment AB | Associated British vs. Live Nation Entertainment |
| Beeks Trading vs. Broadridge Financial Solutions | Beeks Trading vs. Morgan Advanced Materials | Beeks Trading vs. Sabre Insurance Group | Beeks Trading 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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