Correlation Between Centrica PLC and Jupiter Fund
Can any of the company-specific risk be diversified away by investing in both Centrica PLC and Jupiter Fund 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 Jupiter Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrica PLC and Jupiter Fund Management, you can compare the effects of market volatilities on Centrica PLC and Jupiter Fund 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 Jupiter Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrica PLC and Jupiter Fund.
Diversification Opportunities for Centrica PLC and Jupiter Fund
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Centrica and Jupiter is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Centrica PLC and Jupiter Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Fund Management 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 Jupiter Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Fund Management has no effect on the direction of Centrica PLC i.e., Centrica PLC and Jupiter Fund go up and down completely randomly.
Pair Corralation between Centrica PLC and Jupiter Fund
Assuming the 90 days trading horizon Centrica PLC is expected to generate 1.29 times more return on investment than Jupiter Fund. However, Centrica PLC is 1.29 times more volatile than Jupiter Fund Management. It trades about 0.35 of its potential returns per unit of risk. Jupiter Fund Management is currently generating about 0.35 per unit of risk. If you would invest 11,795 in Centrica PLC on September 13, 2024 and sell it today you would earn a total of 1,220 from holding Centrica PLC or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Centrica PLC vs. Jupiter Fund Management
Performance |
| Timeline |
| Centrica PLC |
| Jupiter Fund Management |
Centrica PLC and Jupiter Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrica PLC and Jupiter Fund
The main advantage of trading using opposite Centrica PLC and Jupiter Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrica PLC position performs unexpectedly, Jupiter Fund 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 Jupiter Fund will offset losses from the drop in Jupiter Fund's long position.| Centrica PLC vs. Indutrade AB | Centrica PLC vs. Various Eateries PLC | Centrica PLC vs. Supermarket Income REIT | Centrica PLC vs. Ecclesiastical Insurance Office |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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