Correlation Between Bunzl Plc and FLJ
Can any of the company-specific risk be diversified away by investing in both Bunzl Plc and FLJ 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 FLJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunzl plc and FLJ Group, you can compare the effects of market volatilities on Bunzl Plc and FLJ 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 FLJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunzl Plc and FLJ.
Diversification Opportunities for Bunzl Plc and FLJ
Very good diversification
The 3 months correlation between Bunzl and FLJ is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bunzl plc and FLJ Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLJ Group 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 FLJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLJ Group has no effect on the direction of Bunzl Plc i.e., Bunzl Plc and FLJ go up and down completely randomly.
Pair Corralation between Bunzl Plc and FLJ
Assuming the 90 days horizon Bunzl plc is expected to generate 0.08 times more return on investment than FLJ. However, Bunzl plc is 13.17 times less risky than FLJ. It trades about 0.05 of its potential returns per unit of risk. FLJ Group is currently generating about -0.01 per unit of risk. If you would invest 3,591 in Bunzl plc on September 3, 2024 and sell it today you would earn a total of 951.00 from holding Bunzl plc or generate 26.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 83.23% |
| Values | Daily Returns |
Bunzl plc vs. FLJ Group
Performance |
| Timeline |
| Bunzl plc |
| FLJ Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bunzl Plc and FLJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunzl Plc and FLJ
The main advantage of trading using opposite Bunzl Plc and FLJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunzl Plc position performs unexpectedly, FLJ 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 FLJ will offset losses from the drop in FLJ's long position.| Bunzl Plc vs. TOMI Environmental Solutions | Bunzl Plc vs. SCOR PK | Bunzl Plc vs. HUMANA INC | Bunzl Plc vs. Aquagold International |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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