Correlation Between Brambles and Intertek Group
Can any of the company-specific risk be diversified away by investing in both Brambles and Intertek Group 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 Intertek Group 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 Intertek Group Plc, you can compare the effects of market volatilities on Brambles and Intertek Group 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 Intertek Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brambles and Intertek Group.
Diversification Opportunities for Brambles and Intertek Group
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brambles and Intertek is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Brambles Ltd ADR and Intertek Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intertek Group Plc 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 Intertek Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intertek Group Plc has no effect on the direction of Brambles i.e., Brambles and Intertek Group go up and down completely randomly.
Pair Corralation between Brambles and Intertek Group
Assuming the 90 days horizon Brambles is expected to generate 9.3 times less return on investment than Intertek Group. But when comparing it to its historical volatility, Brambles Ltd ADR is 1.07 times less risky than Intertek Group. It trades about 0.05 of its potential returns per unit of risk. Intertek Group Plc is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 5,841 in Intertek Group Plc on November 3, 2024 and sell it today you would earn a total of 692.00 from holding Intertek Group Plc or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brambles Ltd ADR vs. Intertek Group Plc
Performance |
| Timeline |
| Brambles ADR |
| Intertek Group Plc |
Brambles and Intertek Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brambles and Intertek Group
The main advantage of trading using opposite Brambles and Intertek Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brambles position performs unexpectedly, Intertek Group 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 Intertek Group will offset losses from the drop in Intertek Group's long position.| Brambles vs. Cintas | Brambles vs. Thomson Reuters Corp | Brambles vs. Global Payments | Brambles vs. Wolters Kluwer NV |
| Intertek Group vs. Dexterra Group | Intertek Group vs. Wildpack Beverage | Intertek Group vs. DATA Communications Management | Intertek Group vs. Mitie Group Plc |
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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