Correlation Between Cairn Homes and Glenveagh Properties
Can any of the company-specific risk be diversified away by investing in both Cairn Homes and Glenveagh Properties 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 Cairn Homes and Glenveagh Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and Glenveagh Properties PLC, you can compare the effects of market volatilities on Cairn Homes and Glenveagh Properties 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 Cairn Homes with a short position of Glenveagh Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Glenveagh Properties.
Diversification Opportunities for Cairn Homes and Glenveagh Properties
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cairn and Glenveagh is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC and Glenveagh Properties PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glenveagh Properties PLC and Cairn Homes 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 Cairn Homes PLC are associated (or correlated) with Glenveagh Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glenveagh Properties PLC has no effect on the direction of Cairn Homes i.e., Cairn Homes and Glenveagh Properties go up and down completely randomly.
Pair Corralation between Cairn Homes and Glenveagh Properties
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 1.07 times more return on investment than Glenveagh Properties. However, Cairn Homes is 1.07 times more volatile than Glenveagh Properties PLC. It trades about 0.12 of its potential returns per unit of risk. Glenveagh Properties PLC is currently generating about 0.08 per unit of risk. If you would invest 85.00 in Cairn Homes PLC on August 27, 2024 and sell it today you would earn a total of 125.00 from holding Cairn Homes PLC or generate 147.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. Glenveagh Properties PLC
Performance |
| Timeline |
| Cairn Homes PLC |
| Glenveagh Properties PLC |
Cairn Homes and Glenveagh Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Glenveagh Properties
The main advantage of trading using opposite Cairn Homes and Glenveagh Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes position performs unexpectedly, Glenveagh Properties 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 Glenveagh Properties will offset losses from the drop in Glenveagh Properties' long position.| Cairn Homes vs. Glenveagh Properties PLC | Cairn Homes vs. AIB Group PLC | Cairn Homes vs. Dalata Hotel Group | Cairn Homes vs. Bank of Ireland |
| Glenveagh Properties vs. AIB Group PLC | Glenveagh Properties vs. Dalata Hotel Group | Glenveagh Properties vs. Bank of Ireland |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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