Correlation Between Hollywood Bowl and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both Hollywood Bowl and Cairn Homes 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 Hollywood Bowl and Cairn Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hollywood Bowl Group and Cairn Homes PLC, you can compare the effects of market volatilities on Hollywood Bowl and Cairn Homes 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 Hollywood Bowl with a short position of Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hollywood Bowl and Cairn Homes.
Diversification Opportunities for Hollywood Bowl and Cairn Homes
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hollywood and Cairn is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC and Hollywood Bowl 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 Hollywood Bowl Group are associated (or correlated) with Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Hollywood Bowl i.e., Hollywood Bowl and Cairn Homes go up and down completely randomly.
Pair Corralation between Hollywood Bowl and Cairn Homes
Assuming the 90 days trading horizon Hollywood Bowl Group is expected to under-perform the Cairn Homes. In addition to that, Hollywood Bowl is 1.69 times more volatile than Cairn Homes PLC. It trades about -0.32 of its total potential returns per unit of risk. Cairn Homes PLC is currently generating about -0.29 per unit of volatility. If you would invest 19,240 in Cairn Homes PLC on October 16, 2024 and sell it today you would lose (1,740) from holding Cairn Homes PLC or give up 9.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hollywood Bowl Group vs. Cairn Homes PLC
Performance |
| Timeline |
| Hollywood Bowl Group |
| Cairn Homes PLC |
Hollywood Bowl and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hollywood Bowl and Cairn Homes
The main advantage of trading using opposite Hollywood Bowl and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hollywood Bowl position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| Hollywood Bowl vs. Bisichi Mining PLC | Hollywood Bowl vs. Metro Bank PLC | Hollywood Bowl vs. Hochschild Mining plc | Hollywood Bowl vs. Coeur Mining |
| Cairn Homes vs. Tatton Asset Management | Cairn Homes vs. Arrow Electronics | Cairn Homes vs. Litigation Capital Management | Cairn Homes vs. Beazer Homes USA |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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