Correlation Between Bunzl Plc and Mondi PLC
Can any of the company-specific risk be diversified away by investing in both Bunzl Plc and Mondi PLC 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 Mondi PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunzl plc and Mondi PLC ADR, you can compare the effects of market volatilities on Bunzl Plc and Mondi PLC 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 Mondi PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunzl Plc and Mondi PLC.
Diversification Opportunities for Bunzl Plc and Mondi PLC
Very weak diversification
The 3 months correlation between Bunzl and Mondi is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bunzl plc and Mondi PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondi PLC ADR 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 Mondi PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondi PLC ADR has no effect on the direction of Bunzl Plc i.e., Bunzl Plc and Mondi PLC go up and down completely randomly.
Pair Corralation between Bunzl Plc and Mondi PLC
Assuming the 90 days horizon Bunzl plc is expected to generate 0.75 times more return on investment than Mondi PLC. However, Bunzl plc is 1.34 times less risky than Mondi PLC. It trades about 0.1 of its potential returns per unit of risk. Mondi PLC ADR is currently generating about -0.13 per unit of risk. If you would invest 3,790 in Bunzl plc on August 25, 2024 and sell it today you would earn a total of 618.00 from holding Bunzl plc or generate 16.31% 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. Mondi PLC ADR
Performance |
| Timeline |
| Bunzl plc |
| Mondi PLC ADR |
Bunzl Plc and Mondi PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunzl Plc and Mondi PLC
The main advantage of trading using opposite Bunzl Plc and Mondi PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunzl Plc position performs unexpectedly, Mondi PLC 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 Mondi PLC will offset losses from the drop in Mondi PLC's long position.| Bunzl Plc vs. Element Solutions | Bunzl Plc vs. Orion Engineered Carbons | Bunzl Plc vs. Minerals Technologies | Bunzl Plc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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