Correlation Between Associated British and Secure Property
Can any of the company-specific risk be diversified away by investing in both Associated British and Secure Property 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 Secure Property 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 Secure Property Development, you can compare the effects of market volatilities on Associated British and Secure Property 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 Secure Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Secure Property.
Diversification Opportunities for Associated British and Secure Property
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Associated and Secure is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Secure Property Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secure Property Deve 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 Secure Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secure Property Deve has no effect on the direction of Associated British i.e., Associated British and Secure Property go up and down completely randomly.
Pair Corralation between Associated British and Secure Property
Assuming the 90 days trading horizon Associated British Foods is expected to generate 0.94 times more return on investment than Secure Property. However, Associated British Foods is 1.06 times less risky than Secure Property. It trades about 0.06 of its potential returns per unit of risk. Secure Property Development is currently generating about -0.03 per unit of risk. If you would invest 155,430 in Associated British Foods on September 13, 2024 and sell it today you would earn a total of 63,770 from holding Associated British Foods or generate 41.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Secure Property Development
Performance |
| Timeline |
| Associated British Foods |
| Secure Property Deve |
Associated British and Secure Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Secure Property
The main advantage of trading using opposite Associated British and Secure Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Secure Property 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 Secure Property will offset losses from the drop in Secure Property's long position.| Associated British vs. Ebro Foods | Associated British vs. Premier Foods PLC | Associated British vs. Cairo Communication SpA | Associated British vs. Gruppo MutuiOnline SpA |
| Secure Property vs. Europa Metals | Secure Property vs. Associated British Foods | Secure Property vs. Gaztransport et Technigaz | Secure Property vs. Wheaton Precious Metals |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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