Correlation Between Bunzl PLC and Axfood AB
Can any of the company-specific risk be diversified away by investing in both Bunzl PLC and Axfood AB 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 Bunzl PLC and Axfood AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunzl PLC and Axfood AB, you can compare the effects of market volatilities on Bunzl PLC and Axfood AB 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 Bunzl PLC with a short position of Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunzl PLC and Axfood AB.
Diversification Opportunities for Bunzl PLC and Axfood AB
Very weak diversification
The 3 months correlation between Bunzl and Axfood is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bunzl PLC and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB and Bunzl PLC 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 Bunzl PLC are associated (or correlated) with Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Bunzl PLC i.e., Bunzl PLC and Axfood AB go up and down completely randomly.
Pair Corralation between Bunzl PLC and Axfood AB
Assuming the 90 days trading horizon Bunzl PLC is expected to generate 0.81 times more return on investment than Axfood AB. However, Bunzl PLC is 1.24 times less risky than Axfood AB. It trades about 0.13 of its potential returns per unit of risk. Axfood AB is currently generating about -0.06 per unit of risk. If you would invest 294,080 in Bunzl PLC on September 3, 2024 and sell it today you would earn a total of 61,720 from holding Bunzl PLC or generate 20.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bunzl PLC vs. Axfood AB
Performance |
| Timeline |
| Bunzl PLC |
| Axfood AB |
Bunzl PLC and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunzl PLC and Axfood AB
The main advantage of trading using opposite Bunzl PLC and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunzl PLC position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| Bunzl PLC vs. Catalyst Media Group | Bunzl PLC vs. CATLIN GROUP | Bunzl PLC vs. RTW Venture Fund | Bunzl PLC vs. Secure Property Development |
| Axfood AB vs. Catalyst Media Group | Axfood AB vs. CATLIN GROUP | Axfood AB vs. RTW Venture Fund | Axfood AB vs. Secure Property Development |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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