Correlation Between Associated British and Bunzl Plc
Can any of the company-specific risk be diversified away by investing in both Associated British and Bunzl 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 Associated British and Bunzl Plc 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 Bunzl plc, you can compare the effects of market volatilities on Associated British and Bunzl 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 Associated British with a short position of Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Bunzl Plc.
Diversification Opportunities for Associated British and Bunzl Plc
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Associated and Bunzl is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl 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 Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of Associated British i.e., Associated British and Bunzl Plc go up and down completely randomly.
Pair Corralation between Associated British and Bunzl Plc
Assuming the 90 days horizon Associated British Foods is expected to under-perform the Bunzl Plc. In addition to that, Associated British is 1.59 times more volatile than Bunzl plc. It trades about -0.14 of its total potential returns per unit of risk. Bunzl plc is currently generating about -0.04 per unit of volatility. If you would invest 4,531 in Bunzl plc on August 29, 2024 and sell it today you would lose (60.00) from holding Bunzl plc or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Bunzl plc
Performance |
| Timeline |
| Associated British Foods |
| Bunzl plc |
Associated British and Bunzl Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Bunzl Plc
The main advantage of trading using opposite Associated British and Bunzl Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Bunzl 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 Bunzl Plc will offset losses from the drop in Bunzl Plc's long position.| Associated British vs. Darling Ingredients | Associated British vs. Paranovus Entertainment Technology | Associated British vs. ABIVAX Socit Anonyme | Associated British vs. Pinnacle Sherman Multi Strategy |
| Bunzl Plc vs. Associated British Foods | Bunzl Plc vs. Compass Group PLC | Bunzl Plc vs. Ashtead Gro | Bunzl Plc vs. Kerry Group PLC |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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