Correlation Between Associated British and Hollywood Bowl
Can any of the company-specific risk be diversified away by investing in both Associated British and Hollywood Bowl 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 Hollywood Bowl 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 Hollywood Bowl Group, you can compare the effects of market volatilities on Associated British and Hollywood Bowl 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 Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Hollywood Bowl.
Diversification Opportunities for Associated British and Hollywood Bowl
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Associated and Hollywood is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Hollywood Bowl Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Bowl Group 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 Hollywood Bowl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Bowl Group has no effect on the direction of Associated British i.e., Associated British and Hollywood Bowl go up and down completely randomly.
Pair Corralation between Associated British and Hollywood Bowl
Assuming the 90 days trading horizon Associated British is expected to generate 3.2 times less return on investment than Hollywood Bowl. But when comparing it to its historical volatility, Associated British Foods is 1.29 times less risky than Hollywood Bowl. It trades about 0.01 of its potential returns per unit of risk. Hollywood Bowl Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 25,271 in Hollywood Bowl Group on October 27, 2024 and sell it today you would earn a total of 2,929 from holding Hollywood Bowl Group or generate 11.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Associated British Foods vs. Hollywood Bowl Group
Performance |
| Timeline |
| Associated British Foods |
| Hollywood Bowl Group |
Associated British and Hollywood Bowl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Hollywood Bowl
The main advantage of trading using opposite Associated British and Hollywood Bowl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Hollywood Bowl 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 Hollywood Bowl will offset losses from the drop in Hollywood Bowl's long position.| Associated British vs. Samsung Electronics Co | Associated British vs. Samsung Electronics Co | Associated British vs. Toyota Motor Corp | Associated British vs. State Bank of |
| Hollywood Bowl vs. Optima Health plc | Hollywood Bowl vs. United Internet AG | Hollywood Bowl vs. MyHealthChecked Plc | Hollywood Bowl vs. Zoom Video Communications |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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