Correlation Between Cairn Homes and Pets At
Can any of the company-specific risk be diversified away by investing in both Cairn Homes and Pets At 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 Pets At 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 Pets at Home, you can compare the effects of market volatilities on Cairn Homes and Pets At 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 Pets At. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Pets At.
Diversification Opportunities for Cairn Homes and Pets At
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cairn and Pets is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home 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 Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of Cairn Homes i.e., Cairn Homes and Pets At go up and down completely randomly.
Pair Corralation between Cairn Homes and Pets At
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 1.0 times more return on investment than Pets At. However, Cairn Homes PLC is 1.0 times less risky than Pets At. It trades about -0.11 of its potential returns per unit of risk. Pets at Home is currently generating about -0.23 per unit of risk. If you would invest 18,300 in Cairn Homes PLC on August 27, 2024 and sell it today you would lose (800.00) from holding Cairn Homes PLC or give up 4.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. Pets at Home
Performance |
| Timeline |
| Cairn Homes PLC |
| Pets at Home |
Cairn Homes and Pets At Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Pets At
The main advantage of trading using opposite Cairn Homes and Pets At positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes position performs unexpectedly, Pets At 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 Pets At will offset losses from the drop in Pets At's long position.| Cairn Homes vs. Tungsten West PLC | Cairn Homes vs. Argo Group Limited | Cairn Homes vs. Hardide PLC | Cairn Homes vs. Versarien PLC |
| Pets At vs. Fulcrum Metals PLC | Pets At vs. Capital Metals PLC | Pets At vs. Ross Stores | Pets At vs. Silvercorp Metals |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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