Correlation Between Diageo PLC and Almacenes Xito
Can any of the company-specific risk be diversified away by investing in both Diageo PLC and Almacenes Xito 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 Diageo PLC and Almacenes Xito into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diageo PLC ADR and Almacenes xito SA, you can compare the effects of market volatilities on Diageo PLC and Almacenes Xito 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 Diageo PLC with a short position of Almacenes Xito. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and Almacenes Xito.
Diversification Opportunities for Diageo PLC and Almacenes Xito
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diageo and Almacenes is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC ADR and Almacenes xito SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almacenes xito SA and Diageo PLC 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 Diageo PLC ADR are associated (or correlated) with Almacenes Xito. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Almacenes xito SA has no effect on the direction of Diageo PLC i.e., Diageo PLC and Almacenes Xito go up and down completely randomly.
Pair Corralation between Diageo PLC and Almacenes Xito
Considering the 90-day investment horizon Diageo PLC ADR is expected to generate 0.65 times more return on investment than Almacenes Xito. However, Diageo PLC ADR is 1.53 times less risky than Almacenes Xito. It trades about -0.01 of its potential returns per unit of risk. Almacenes xito SA is currently generating about -0.11 per unit of risk. If you would invest 14,135 in Diageo PLC ADR on September 14, 2024 and sell it today you would lose (929.00) from holding Diageo PLC ADR or give up 6.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Diageo PLC ADR vs. Almacenes xito SA
Performance |
| Timeline |
| Diageo PLC ADR |
| Almacenes xito SA |
Diageo PLC and Almacenes Xito Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diageo PLC and Almacenes Xito
The main advantage of trading using opposite Diageo PLC and Almacenes Xito positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo PLC position performs unexpectedly, Almacenes Xito 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 Almacenes Xito will offset losses from the drop in Almacenes Xito's long position.| Diageo PLC vs. Naked Wines plc | Diageo PLC vs. Andrew Peller Limited | Diageo PLC vs. Iconic Brands | Diageo PLC vs. Naked Wines plc |
| Almacenes Xito vs. Delek Drilling | Almacenes Xito vs. Noble plc | Almacenes Xito vs. Sun Country Airlines | Almacenes Xito vs. Seadrill Limited |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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