Correlation Between Diversified Energy and Whitbread PLC
Can any of the company-specific risk be diversified away by investing in both Diversified Energy and Whitbread PLC 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 Diversified Energy and Whitbread PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified Energy and Whitbread PLC, you can compare the effects of market volatilities on Diversified Energy and Whitbread PLC 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 Diversified Energy with a short position of Whitbread PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Energy and Whitbread PLC.
Diversification Opportunities for Diversified Energy and Whitbread PLC
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Diversified and Whitbread is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Energy and Whitbread PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread PLC and Diversified Energy 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 Diversified Energy are associated (or correlated) with Whitbread PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitbread PLC has no effect on the direction of Diversified Energy i.e., Diversified Energy and Whitbread PLC go up and down completely randomly.
Pair Corralation between Diversified Energy and Whitbread PLC
Assuming the 90 days trading horizon Diversified Energy is expected to generate 3.65 times more return on investment than Whitbread PLC. However, Diversified Energy is 3.65 times more volatile than Whitbread PLC. It trades about 0.48 of its potential returns per unit of risk. Whitbread PLC is currently generating about -0.28 per unit of risk. If you would invest 93,529 in Diversified Energy on September 1, 2024 and sell it today you would earn a total of 34,271 from holding Diversified Energy or generate 36.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Diversified Energy vs. Whitbread PLC
Performance |
| Timeline |
| Diversified Energy |
| Whitbread PLC |
Diversified Energy and Whitbread PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Energy and Whitbread PLC
The main advantage of trading using opposite Diversified Energy and Whitbread PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Energy position performs unexpectedly, Whitbread PLC 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 Whitbread PLC will offset losses from the drop in Whitbread PLC's long position.| Diversified Energy vs. Cairo Communication SpA | Diversified Energy vs. GlobalData PLC | Diversified Energy vs. Batm Advanced Communications | Diversified Energy vs. Dalata Hotel Group |
| Whitbread PLC vs. Viridian Therapeutics | Whitbread PLC vs. CVR Energy | Whitbread PLC vs. Nationwide Building Society | Whitbread PLC vs. Dollar Tree |
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
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |