Correlation Between Caffyns PLC and Admiral Group
Can any of the company-specific risk be diversified away by investing in both Caffyns PLC 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 Caffyns PLC and Admiral Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caffyns PLC and Admiral Group PLC, you can compare the effects of market volatilities on Caffyns PLC 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 Caffyns PLC with a short position of Admiral Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caffyns PLC and Admiral Group.
Diversification Opportunities for Caffyns PLC and Admiral Group
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Caffyns and Admiral is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Caffyns PLC 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 Caffyns 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 Caffyns PLC 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 Caffyns PLC i.e., Caffyns PLC and Admiral Group go up and down completely randomly.
Pair Corralation between Caffyns PLC and Admiral Group
Assuming the 90 days trading horizon Caffyns PLC is expected to under-perform the Admiral Group. In addition to that, Caffyns PLC is 1.36 times more volatile than Admiral Group PLC. It trades about -0.02 of its total potential returns per unit of risk. Admiral Group PLC is currently generating about 0.04 per unit of volatility. If you would invest 208,238 in Admiral Group PLC on August 30, 2024 and sell it today you would earn a total of 38,162 from holding Admiral Group PLC or generate 18.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caffyns PLC vs. Admiral Group PLC
Performance |
| Timeline |
| Caffyns PLC |
| Admiral Group PLC |
Caffyns PLC and Admiral Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caffyns PLC and Admiral Group
The main advantage of trading using opposite Caffyns PLC and Admiral Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caffyns PLC 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.| Caffyns PLC vs. Hansa Investment | Caffyns PLC vs. Diversified Energy | Caffyns PLC vs. Evolution Gaming Group | Caffyns PLC vs. Federal Realty Investment |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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