Correlation Between Associated British and LBG Media
Can any of the company-specific risk be diversified away by investing in both Associated British and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on Associated British and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and LBG Media.
Diversification Opportunities for Associated British and LBG Media
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Associated and LBG is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Associated British i.e., Associated British and LBG Media go up and down completely randomly.
Pair Corralation between Associated British and LBG Media
Assuming the 90 days trading horizon Associated British Foods is expected to under-perform the LBG Media. But the stock apears to be less risky and, when comparing its historical volatility, Associated British Foods is 1.57 times less risky than LBG Media. The stock trades about -0.15 of its potential returns per unit of risk. The LBG Media PLC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 13,100 in LBG Media PLC on October 26, 2024 and sell it today you would lose (900.00) from holding LBG Media PLC or give up 6.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. LBG Media PLC
Performance |
| Timeline |
| Associated British Foods |
| LBG Media PLC |
Associated British and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and LBG Media
The main advantage of trading using opposite Associated British and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media'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 |
| LBG Media vs. Sligro Food Group | LBG Media vs. Aeorema Communications Plc | LBG Media vs. Associated British Foods | LBG Media vs. Dairy Farm International |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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