Correlation Between Schroders Investment and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Schroders Investment and DFS Furniture 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 Schroders Investment and DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schroders Investment Trusts and DFS Furniture PLC, you can compare the effects of market volatilities on Schroders Investment and DFS Furniture 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 Schroders Investment with a short position of DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schroders Investment and DFS Furniture.
Diversification Opportunities for Schroders Investment and DFS Furniture
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Schroders and DFS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Schroders Investment Trusts and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC and Schroders Investment 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 Schroders Investment Trusts are associated (or correlated) with DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Schroders Investment i.e., Schroders Investment and DFS Furniture go up and down completely randomly.
Pair Corralation between Schroders Investment and DFS Furniture
Assuming the 90 days trading horizon Schroders Investment is expected to generate 1.85 times less return on investment than DFS Furniture. But when comparing it to its historical volatility, Schroders Investment Trusts is 2.37 times less risky than DFS Furniture. It trades about 0.07 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10,892 in DFS Furniture PLC on September 3, 2024 and sell it today you would earn a total of 3,108 from holding DFS Furniture PLC or generate 28.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schroders Investment Trusts vs. DFS Furniture PLC
Performance |
| Timeline |
| Schroders Investment |
| DFS Furniture PLC |
Schroders Investment and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schroders Investment and DFS Furniture
The main advantage of trading using opposite Schroders Investment and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schroders Investment position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Schroders Investment vs. Virgin Wines UK | Schroders Investment vs. Dentsply Sirona | Schroders Investment vs. Aberdeen Diversified Income | Schroders Investment vs. Axway Software SA |
| DFS Furniture vs. Rockfire Resources plc | DFS Furniture vs. Tlou Energy | DFS Furniture vs. Falcon Oil Gas | DFS Furniture vs. Helium One Global |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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