Correlation Between Cairn Homes and Bankers Investment
Can any of the company-specific risk be diversified away by investing in both Cairn Homes 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 Cairn Homes and Bankers Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and Bankers Investment Trust, you can compare the effects of market volatilities on Cairn Homes 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 Cairn Homes with a short position of Bankers Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Bankers Investment.
Diversification Opportunities for Cairn Homes and Bankers Investment
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cairn and Bankers is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes 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 Cairn Homes 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 Cairn Homes 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 Cairn Homes i.e., Cairn Homes and Bankers Investment go up and down completely randomly.
Pair Corralation between Cairn Homes and Bankers Investment
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 1.96 times more return on investment than Bankers Investment. However, Cairn Homes is 1.96 times more volatile than Bankers Investment Trust. It trades about 0.11 of its potential returns per unit of risk. Bankers Investment Trust is currently generating about 0.08 per unit of risk. If you would invest 13,267 in Cairn Homes PLC on November 7, 2024 and sell it today you would earn a total of 5,613 from holding Cairn Homes PLC or generate 42.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. Bankers Investment Trust
Performance |
| Timeline |
| Cairn Homes PLC |
| Bankers Investment Trust |
Cairn Homes and Bankers Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Bankers Investment
The main advantage of trading using opposite Cairn Homes and Bankers Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes 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.| Cairn Homes vs. Universal Health Services | Cairn Homes vs. Naturhouse Health SA | Cairn Homes vs. EJF Investments | Cairn Homes vs. Cardinal Health |
| Bankers Investment vs. Gamma Communications PLC | Bankers Investment vs. Zoom Video Communications | Bankers Investment vs. Litigation Capital Management | Bankers Investment vs. Aeorema Communications Plc |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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