Correlation Between Associated British and Supermarket Income
Can any of the company-specific risk be diversified away by investing in both Associated British and Supermarket Income 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 Supermarket Income 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 Supermarket Income REIT, you can compare the effects of market volatilities on Associated British and Supermarket Income 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 Supermarket Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Supermarket Income.
Diversification Opportunities for Associated British and Supermarket Income
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Associated and Supermarket is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Supermarket Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supermarket Income REIT 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 Supermarket Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supermarket Income REIT has no effect on the direction of Associated British i.e., Associated British and Supermarket Income go up and down completely randomly.
Pair Corralation between Associated British and Supermarket Income
Assuming the 90 days trading horizon Associated British Foods is expected to under-perform the Supermarket Income. But the stock apears to be less risky and, when comparing its historical volatility, Associated British Foods is 1.19 times less risky than Supermarket Income. The stock trades about -0.09 of its potential returns per unit of risk. The Supermarket Income REIT is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 6,760 in Supermarket Income REIT on October 21, 2024 and sell it today you would earn a total of 210.00 from holding Supermarket Income REIT or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Supermarket Income REIT
Performance |
| Timeline |
| Associated British Foods |
| Supermarket Income REIT |
Associated British and Supermarket Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Supermarket Income
The main advantage of trading using opposite Associated British and Supermarket Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Supermarket Income 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 Supermarket Income will offset losses from the drop in Supermarket Income's long position.| Associated British vs. Charter Communications Cl | Associated British vs. Fonix Mobile plc | Associated British vs. Batm Advanced Communications | Associated British vs. PPHE Hotel Group |
| Supermarket Income vs. Vienna Insurance Group | Supermarket Income vs. Tyson Foods Cl | Supermarket Income vs. Compagnie Plastic Omnium | Supermarket Income vs. Ecclesiastical Insurance Office |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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