Correlation Between Centaur Media and LBG Media
Can any of the company-specific risk be diversified away by investing in both Centaur Media and LBG Media 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 LBG Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centaur Media and LBG Media PLC, you can compare the effects of market volatilities on Centaur Media and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaur Media and LBG Media.
Diversification Opportunities for Centaur Media and LBG Media
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Centaur and LBG is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Media and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Centaur Media i.e., Centaur Media and LBG Media go up and down completely randomly.
Pair Corralation between Centaur Media and LBG Media
Assuming the 90 days trading horizon Centaur Media is expected to under-perform the LBG Media. But the stock apears to be less risky and, when comparing its historical volatility, Centaur Media is 1.13 times less risky than LBG Media. The stock trades about -0.02 of its potential returns per unit of risk. The LBG Media PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,690 in LBG Media PLC on September 2, 2024 and sell it today you would earn a total of 6,010 from holding LBG Media PLC or generate 89.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centaur Media vs. LBG Media PLC
Performance |
| Timeline |
| Centaur Media |
| LBG Media PLC |
Centaur Media and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centaur Media and LBG Media
The main advantage of trading using opposite Centaur Media and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaur Media position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.| Centaur Media vs. FC Investment Trust | Centaur Media vs. MoneysupermarketCom Group PLC | Centaur Media vs. Molson Coors Beverage | Centaur Media vs. CAP LEASE AVIATION |
| LBG Media vs. Edita Food Industries | LBG Media vs. L3Harris Technologies | LBG Media vs. Premier Foods PLC | LBG Media vs. Check Point Software |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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