Correlation Between Bloomsbury Publishing and International Biotechnology
Can any of the company-specific risk be diversified away by investing in both Bloomsbury Publishing and International Biotechnology 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 Bloomsbury Publishing and International Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bloomsbury Publishing Plc and International Biotechnology Trust, you can compare the effects of market volatilities on Bloomsbury Publishing and International Biotechnology 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 Bloomsbury Publishing with a short position of International Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloomsbury Publishing and International Biotechnology.
Diversification Opportunities for Bloomsbury Publishing and International Biotechnology
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bloomsbury and International is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bloomsbury Publishing Plc and International Biotechnology Tr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Biotechnology and Bloomsbury Publishing 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 Bloomsbury Publishing Plc are associated (or correlated) with International Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Biotechnology has no effect on the direction of Bloomsbury Publishing i.e., Bloomsbury Publishing and International Biotechnology go up and down completely randomly.
Pair Corralation between Bloomsbury Publishing and International Biotechnology
Assuming the 90 days trading horizon Bloomsbury Publishing Plc is expected to under-perform the International Biotechnology. In addition to that, Bloomsbury Publishing is 1.01 times more volatile than International Biotechnology Trust. It trades about -0.22 of its total potential returns per unit of risk. International Biotechnology Trust is currently generating about 0.03 per unit of volatility. If you would invest 68,800 in International Biotechnology Trust on August 29, 2024 and sell it today you would earn a total of 600.00 from holding International Biotechnology Trust or generate 0.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bloomsbury Publishing Plc vs. International Biotechnology Tr
Performance |
Timeline |
Bloomsbury Publishing Plc |
International Biotechnology |
Bloomsbury Publishing and International Biotechnology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bloomsbury Publishing and International Biotechnology
The main advantage of trading using opposite Bloomsbury Publishing and International Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloomsbury Publishing position performs unexpectedly, International Biotechnology 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 International Biotechnology will offset losses from the drop in International Biotechnology's long position.Bloomsbury Publishing vs. Electronic Arts | Bloomsbury Publishing vs. Samsung Electronics Co | Bloomsbury Publishing vs. Ebro Foods | Bloomsbury Publishing vs. LPKF Laser Electronics |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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