Correlation Between Proximus and Persimmon Plc
Can any of the company-specific risk be diversified away by investing in both Proximus and Persimmon 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 Proximus and Persimmon Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Proximus NV ADR and Persimmon Plc, you can compare the effects of market volatilities on Proximus and Persimmon 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 Proximus with a short position of Persimmon Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proximus and Persimmon Plc.
Diversification Opportunities for Proximus and Persimmon Plc
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Proximus and Persimmon is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Proximus NV ADR and Persimmon Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Persimmon Plc and Proximus 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 Proximus NV ADR are associated (or correlated) with Persimmon Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Persimmon Plc has no effect on the direction of Proximus i.e., Proximus and Persimmon Plc go up and down completely randomly.
Pair Corralation between Proximus and Persimmon Plc
Assuming the 90 days horizon Proximus NV ADR is expected to generate 2.17 times more return on investment than Persimmon Plc. However, Proximus is 2.17 times more volatile than Persimmon Plc. It trades about 0.05 of its potential returns per unit of risk. Persimmon Plc is currently generating about -0.01 per unit of risk. If you would invest 106.00 in Proximus NV ADR on November 27, 2024 and sell it today you would earn a total of 3.00 from holding Proximus NV ADR or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Proximus NV ADR vs. Persimmon Plc
Performance |
| Timeline |
| Proximus NV ADR |
| Persimmon Plc |
Proximus and Persimmon Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Proximus and Persimmon Plc
The main advantage of trading using opposite Proximus and Persimmon Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proximus position performs unexpectedly, Persimmon 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 Persimmon Plc will offset losses from the drop in Persimmon Plc's long position.| Proximus vs. Singapore Telecommunications Limited | Proximus vs. Telstra Limited | Proximus vs. MTN Group Ltd | Proximus vs. Tele2 AB |
| Persimmon Plc vs. Taylor Wimpey plc | Persimmon Plc vs. Barratt Developments PLC | Persimmon Plc vs. Barratt Developments plc | Persimmon Plc vs. Consorcio ARA S |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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