Correlation Between Cairn Homes and First
Can any of the company-specific risk be diversified away by investing in both Cairn Homes and First 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 First 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 First Class Metals, you can compare the effects of market volatilities on Cairn Homes and First 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 First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and First.
Diversification Opportunities for Cairn Homes and First
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cairn and First is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC and First Class Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Class Metals 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 First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Class Metals has no effect on the direction of Cairn Homes i.e., Cairn Homes and First go up and down completely randomly.
Pair Corralation between Cairn Homes and First
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 0.34 times more return on investment than First. However, Cairn Homes PLC is 2.95 times less risky than First. It trades about -0.2 of its potential returns per unit of risk. First Class Metals is currently generating about -0.32 per unit of risk. If you would invest 19,440 in Cairn Homes PLC on October 13, 2024 and sell it today you would lose (980.00) from holding Cairn Homes PLC or give up 5.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. First Class Metals
Performance |
| Timeline |
| Cairn Homes PLC |
| First Class Metals |
Cairn Homes and First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and First
The main advantage of trading using opposite Cairn Homes and First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes position performs unexpectedly, First 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 First will offset losses from the drop in First's long position.| Cairn Homes vs. Air Products Chemicals | Cairn Homes vs. Extra Space Storage | Cairn Homes vs. Teradata Corp | Cairn Homes vs. Delta Air Lines |
| First vs. Spirent Communications plc | First vs. Pets at Home | First vs. Cairn Homes PLC | First vs. Ecclesiastical Insurance Office |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |