Correlation Between Centrica PLC and Bankers Investment
Can any of the company-specific risk be diversified away by investing in both Centrica PLC and Bankers Investment 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 Centrica PLC and Bankers Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrica PLC and Bankers Investment Trust, you can compare the effects of market volatilities on Centrica PLC and Bankers Investment 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 Centrica PLC with a short position of Bankers Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrica PLC and Bankers Investment.
Diversification Opportunities for Centrica PLC and Bankers Investment
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Centrica and Bankers is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Centrica PLC and Bankers Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankers Investment Trust and Centrica 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 Centrica PLC are associated (or correlated) with Bankers Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankers Investment Trust has no effect on the direction of Centrica PLC i.e., Centrica PLC and Bankers Investment go up and down completely randomly.
Pair Corralation between Centrica PLC and Bankers Investment
Assuming the 90 days trading horizon Centrica PLC is expected to generate 1.89 times less return on investment than Bankers Investment. In addition to that, Centrica PLC is 1.97 times more volatile than Bankers Investment Trust. It trades about 0.03 of its total potential returns per unit of risk. Bankers Investment Trust is currently generating about 0.11 per unit of volatility. If you would invest 10,118 in Bankers Investment Trust on November 3, 2024 and sell it today you would earn a total of 2,422 from holding Bankers Investment Trust or generate 23.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrica PLC vs. Bankers Investment Trust
Performance |
| Timeline |
| Centrica PLC |
| Bankers Investment Trust |
Centrica PLC and Bankers Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrica PLC and Bankers Investment
The main advantage of trading using opposite Centrica PLC and Bankers Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrica PLC position performs unexpectedly, Bankers Investment 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 Bankers Investment will offset losses from the drop in Bankers Investment's long position.| Centrica PLC vs. CNH Industrial NV | Centrica PLC vs. URU Metals | Centrica PLC vs. Gear4music Plc | Centrica PLC vs. DFS Furniture PLC |
| Bankers Investment vs. Sovereign Metals | Bankers Investment vs. Alien Metals | Bankers Investment vs. Capital Drilling | Bankers Investment vs. Adriatic Metals |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |