Correlation Between Associated British and CIA ENGER
Can any of the company-specific risk be diversified away by investing in both Associated British and CIA ENGER 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 CIA ENGER 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 CIA ENGER ADR, you can compare the effects of market volatilities on Associated British and CIA ENGER 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 CIA ENGER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and CIA ENGER.
Diversification Opportunities for Associated British and CIA ENGER
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Associated and CIA is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and CIA ENGER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIA ENGER ADR 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 CIA ENGER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIA ENGER ADR has no effect on the direction of Associated British i.e., Associated British and CIA ENGER go up and down completely randomly.
Pair Corralation between Associated British and CIA ENGER
Assuming the 90 days trading horizon Associated British Foods is expected to under-perform the CIA ENGER. But the stock apears to be less risky and, when comparing its historical volatility, Associated British Foods is 1.9 times less risky than CIA ENGER. The stock trades about -0.04 of its potential returns per unit of risk. The CIA ENGER ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 178.00 in CIA ENGER ADR on September 12, 2024 and sell it today you would earn a total of 36.00 from holding CIA ENGER ADR or generate 20.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Associated British Foods vs. CIA ENGER ADR
Performance |
| Timeline |
| Associated British Foods |
| CIA ENGER ADR |
Associated British and CIA ENGER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and CIA ENGER
The main advantage of trading using opposite Associated British and CIA ENGER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, CIA ENGER 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 CIA ENGER will offset losses from the drop in CIA ENGER's long position.| Associated British vs. ALIOR BANK | Associated British vs. National Bank Holdings | Associated British vs. BE Semiconductor Industries | Associated British vs. Commonwealth Bank of |
| CIA ENGER vs. ASSOC BR FOODS | CIA ENGER vs. Tencent Music Entertainment | CIA ENGER vs. Associated British Foods | CIA ENGER vs. Dave Busters Entertainment |
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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