Correlation Between Brambles and Dexterra
Can any of the company-specific risk be diversified away by investing in both Brambles and Dexterra 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 Brambles and Dexterra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brambles Ltd ADR and Dexterra Group, you can compare the effects of market volatilities on Brambles and Dexterra 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 Brambles with a short position of Dexterra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brambles and Dexterra.
Diversification Opportunities for Brambles and Dexterra
Poor diversification
The 3 months correlation between Brambles and Dexterra is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Brambles Ltd ADR and Dexterra Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexterra Group and Brambles 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 Brambles Ltd ADR are associated (or correlated) with Dexterra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexterra Group has no effect on the direction of Brambles i.e., Brambles and Dexterra go up and down completely randomly.
Pair Corralation between Brambles and Dexterra
Assuming the 90 days horizon Brambles is expected to generate 5.17 times less return on investment than Dexterra. In addition to that, Brambles is 1.0 times more volatile than Dexterra Group. It trades about 0.05 of its total potential returns per unit of risk. Dexterra Group is currently generating about 0.28 per unit of volatility. If you would invest 455.00 in Dexterra Group on August 28, 2024 and sell it today you would earn a total of 39.00 from holding Dexterra Group or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brambles Ltd ADR vs. Dexterra Group
Performance |
| Timeline |
| Brambles ADR |
| Dexterra Group |
Brambles and Dexterra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brambles and Dexterra
The main advantage of trading using opposite Brambles and Dexterra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brambles position performs unexpectedly, Dexterra 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 Dexterra will offset losses from the drop in Dexterra's long position.| Brambles vs. SPAR Group | Brambles vs. Performant Financial | Brambles vs. AZZ Incorporated | Brambles vs. Wilhelmina |
| Dexterra vs. Element Solutions | Dexterra vs. Orion Engineered Carbons | Dexterra vs. Minerals Technologies | Dexterra vs. Ingevity Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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