Correlation Between Centrica PLC and Fibra UNO
Can any of the company-specific risk be diversified away by investing in both Centrica PLC and Fibra UNO 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 Fibra UNO 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 Fibra UNO, you can compare the effects of market volatilities on Centrica PLC and Fibra UNO 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 Fibra UNO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrica PLC and Fibra UNO.
Diversification Opportunities for Centrica PLC and Fibra UNO
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Centrica and Fibra is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Centrica PLC ADR and Fibra UNO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra UNO 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 Fibra UNO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra UNO has no effect on the direction of Centrica PLC i.e., Centrica PLC and Fibra UNO go up and down completely randomly.
Pair Corralation between Centrica PLC and Fibra UNO
Assuming the 90 days horizon Centrica PLC is expected to generate 23.6 times less return on investment than Fibra UNO. But when comparing it to its historical volatility, Centrica PLC ADR is 11.47 times less risky than Fibra UNO. It trades about 0.05 of its potential returns per unit of risk. Fibra UNO is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 67.00 in Fibra UNO on September 3, 2024 and sell it today you would earn a total of 39.00 from holding Fibra UNO or generate 58.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.87% |
| Values | Daily Returns |
Centrica PLC ADR vs. Fibra UNO
Performance |
| Timeline |
| Centrica PLC ADR |
| Fibra UNO |
Centrica PLC and Fibra UNO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrica PLC and Fibra UNO
The main advantage of trading using opposite Centrica PLC and Fibra UNO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrica PLC position performs unexpectedly, Fibra UNO 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 Fibra UNO will offset losses from the drop in Fibra UNO's long position.| Centrica PLC vs. NRG Energy | Centrica PLC vs. TransAlta Corp | Centrica PLC vs. Kenon Holdings | Centrica PLC vs. Pampa Energia SA |
| Fibra UNO vs. British Land | Fibra UNO vs. Global Net Lease, | Fibra UNO vs. VICI Properties | Fibra UNO vs. British Land |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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