Correlation Between Cairn Homes and Mitie Group
Can any of the company-specific risk be diversified away by investing in both Cairn Homes and Mitie Group 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 Mitie Group 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 Mitie Group PLC, you can compare the effects of market volatilities on Cairn Homes and Mitie Group 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 Mitie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Mitie Group.
Diversification Opportunities for Cairn Homes and Mitie Group
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cairn and Mitie is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC and Mitie Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitie Group PLC 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 Mitie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitie Group PLC has no effect on the direction of Cairn Homes i.e., Cairn Homes and Mitie Group go up and down completely randomly.
Pair Corralation between Cairn Homes and Mitie Group
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 1.26 times more return on investment than Mitie Group. However, Cairn Homes is 1.26 times more volatile than Mitie Group PLC. It trades about 0.05 of its potential returns per unit of risk. Mitie Group PLC is currently generating about -0.01 per unit of risk. If you would invest 18,620 in Cairn Homes PLC on September 12, 2024 and sell it today you would earn a total of 300.00 from holding Cairn Homes PLC or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. Mitie Group PLC
Performance |
| Timeline |
| Cairn Homes PLC |
| Mitie Group PLC |
Cairn Homes and Mitie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Mitie Group
The main advantage of trading using opposite Cairn Homes and Mitie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes position performs unexpectedly, Mitie Group 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 Mitie Group will offset losses from the drop in Mitie Group's long position.| Cairn Homes vs. National Atomic Co | Cairn Homes vs. OTP Bank Nyrt | Cairn Homes vs. Samsung Electronics Co | Cairn Homes vs. Samsung Electronics Co |
| Mitie Group vs. United Utilities Group | Mitie Group vs. Ecclesiastical Insurance Office | Mitie Group vs. Zurich Insurance Group | Mitie Group vs. Roebuck Food Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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