Correlation Between Centrica PLC and Centrica Plc
Can any of the company-specific risk be diversified away by investing in both Centrica PLC and Centrica 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 Centrica PLC and Centrica Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrica PLC ADR and Centrica plc, you can compare the effects of market volatilities on Centrica PLC and Centrica 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 Centrica PLC with a short position of Centrica Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrica PLC and Centrica Plc.
Diversification Opportunities for Centrica PLC and Centrica Plc
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Centrica and Centrica is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Centrica PLC ADR and Centrica plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrica plc 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 ADR are associated (or correlated) with Centrica Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrica plc has no effect on the direction of Centrica PLC i.e., Centrica PLC and Centrica Plc go up and down completely randomly.
Pair Corralation between Centrica PLC and Centrica Plc
If you would invest 155.00 in Centrica plc on November 30, 2024 and sell it today you would earn a total of 34.00 from holding Centrica plc or generate 21.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Centrica PLC ADR vs. Centrica plc
Performance |
| Timeline |
| Centrica PLC ADR |
Risk-Adjusted Performance
OK
Weak | Strong |
| Centrica plc |
Centrica PLC and Centrica Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrica PLC and Centrica Plc
The main advantage of trading using opposite Centrica PLC and Centrica Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrica PLC position performs unexpectedly, Centrica 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 Centrica Plc will offset losses from the drop in Centrica Plc's long position.| Centrica PLC vs. NRG Energy | Centrica PLC vs. TransAlta Corp | Centrica PLC vs. Kenon Holdings | Centrica PLC vs. Pampa Energia SA |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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