Correlation Between Commercial International and Britvic PLC
Can any of the company-specific risk be diversified away by investing in both Commercial International and Britvic 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 Commercial International and Britvic PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial International Bank and Britvic PLC ADR, you can compare the effects of market volatilities on Commercial International and Britvic 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 Commercial International with a short position of Britvic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial International and Britvic PLC.
Diversification Opportunities for Commercial International and Britvic PLC
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commercial and Britvic is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Commercial International Bank and Britvic PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Britvic PLC ADR and Commercial International 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 Commercial International Bank are associated (or correlated) with Britvic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Britvic PLC ADR has no effect on the direction of Commercial International i.e., Commercial International and Britvic PLC go up and down completely randomly.
Pair Corralation between Commercial International and Britvic PLC
Assuming the 90 days horizon Commercial International is expected to generate 1.41 times less return on investment than Britvic PLC. In addition to that, Commercial International is 1.52 times more volatile than Britvic PLC ADR. It trades about 0.04 of its total potential returns per unit of risk. Britvic PLC ADR is currently generating about 0.09 per unit of volatility. If you would invest 2,116 in Britvic PLC ADR on August 31, 2024 and sell it today you would earn a total of 1,120 from holding Britvic PLC ADR or generate 52.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 88.74% |
| Values | Daily Returns |
Commercial International Bank vs. Britvic PLC ADR
Performance |
| Timeline |
| Commercial International |
| Britvic PLC ADR |
Commercial International and Britvic PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial International and Britvic PLC
The main advantage of trading using opposite Commercial International and Britvic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial International position performs unexpectedly, Britvic 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 Britvic PLC will offset losses from the drop in Britvic PLC's long position.| Commercial International vs. Bank Mandiri Persero | Commercial International vs. Turkiye Garanti Bankasi | Commercial International vs. BOC Hong Kong | Commercial International vs. Hang Seng Bank |
| Britvic PLC vs. PepsiCo | Britvic PLC vs. Coca Cola Consolidated | Britvic PLC vs. Monster Beverage Corp | Britvic PLC vs. Celsius Holdings |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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