Correlation Between Admiral Group and Caffyns PLC
Can any of the company-specific risk be diversified away by investing in both Admiral Group and Caffyns PLC 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 Admiral Group and Caffyns PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Admiral Group PLC and Caffyns PLC, you can compare the effects of market volatilities on Admiral Group and Caffyns PLC 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 Admiral Group with a short position of Caffyns PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Admiral Group and Caffyns PLC.
Diversification Opportunities for Admiral Group and Caffyns PLC
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Admiral and Caffyns is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Admiral Group PLC and Caffyns PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caffyns PLC and Admiral Group 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 Admiral Group PLC are associated (or correlated) with Caffyns PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caffyns PLC has no effect on the direction of Admiral Group i.e., Admiral Group and Caffyns PLC go up and down completely randomly.
Pair Corralation between Admiral Group and Caffyns PLC
Assuming the 90 days trading horizon Admiral Group PLC is expected to generate 1.04 times more return on investment than Caffyns PLC. However, Admiral Group is 1.04 times more volatile than Caffyns PLC. It trades about -0.15 of its potential returns per unit of risk. Caffyns PLC is currently generating about -0.21 per unit of risk. If you would invest 257,100 in Admiral Group PLC on August 30, 2024 and sell it today you would lose (10,700) from holding Admiral Group PLC or give up 4.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Admiral Group PLC vs. Caffyns PLC
Performance |
| Timeline |
| Admiral Group PLC |
| Caffyns PLC |
Admiral Group and Caffyns PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Admiral Group and Caffyns PLC
The main advantage of trading using opposite Admiral Group and Caffyns PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Admiral Group position performs unexpectedly, Caffyns PLC 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 Caffyns PLC will offset losses from the drop in Caffyns PLC's long position.| Admiral Group vs. Power Metal Resources | Admiral Group vs. Fulcrum Metals PLC | Admiral Group vs. AMG Advanced Metallurgical | Admiral Group vs. Wheaton Precious Metals |
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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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