Correlation Between Centaur Media and Admiral Group
Can any of the company-specific risk be diversified away by investing in both Centaur Media and Admiral 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 Centaur Media and Admiral Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centaur Media and Admiral Group PLC, you can compare the effects of market volatilities on Centaur Media and Admiral 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 Centaur Media with a short position of Admiral Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaur Media and Admiral Group.
Diversification Opportunities for Centaur Media and Admiral Group
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Centaur and Admiral is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Media and Admiral Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Admiral Group PLC and Centaur Media 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 Centaur Media are associated (or correlated) with Admiral Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Admiral Group PLC has no effect on the direction of Centaur Media i.e., Centaur Media and Admiral Group go up and down completely randomly.
Pair Corralation between Centaur Media and Admiral Group
Assuming the 90 days trading horizon Centaur Media is expected to under-perform the Admiral Group. In addition to that, Centaur Media is 1.17 times more volatile than Admiral Group PLC. It trades about -0.11 of its total potential returns per unit of risk. Admiral Group PLC is currently generating about 0.14 per unit of volatility. If you would invest 251,000 in Admiral Group PLC on September 14, 2024 and sell it today you would earn a total of 11,800 from holding Admiral Group PLC or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centaur Media vs. Admiral Group PLC
Performance |
| Timeline |
| Centaur Media |
| Admiral Group PLC |
Centaur Media and Admiral Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centaur Media and Admiral Group
The main advantage of trading using opposite Centaur Media and Admiral Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaur Media position performs unexpectedly, Admiral 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 Admiral Group will offset losses from the drop in Admiral Group's long position.| Centaur Media vs. Quantum Blockchain Technologies | Centaur Media vs. Versarien PLC | Centaur Media vs. Argo Group Limited | Centaur Media vs. Tungsten West PLC |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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