Correlation Between Diageo PLC and RMG Acquisition
Can any of the company-specific risk be diversified away by investing in both Diageo PLC and RMG Acquisition 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 RMG Acquisition 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 RMG Acquisition Corp, you can compare the effects of market volatilities on Diageo PLC and RMG Acquisition 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 RMG Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and RMG Acquisition.
Diversification Opportunities for Diageo PLC and RMG Acquisition
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diageo and RMG is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC ADR and RMG Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMG Acquisition Corp 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 RMG Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMG Acquisition Corp has no effect on the direction of Diageo PLC i.e., Diageo PLC and RMG Acquisition go up and down completely randomly.
Pair Corralation between Diageo PLC and RMG Acquisition
If you would invest 940.00 in RMG Acquisition Corp on September 12, 2024 and sell it today you would earn a total of 0.00 from holding RMG Acquisition Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 1.56% |
| Values | Daily Returns |
Diageo PLC ADR vs. RMG Acquisition Corp
Performance |
| Timeline |
| Diageo PLC ADR |
| RMG Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Diageo PLC and RMG Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diageo PLC and RMG Acquisition
The main advantage of trading using opposite Diageo PLC and RMG Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo PLC position performs unexpectedly, RMG Acquisition 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 RMG Acquisition will offset losses from the drop in RMG Acquisition's long position.| Diageo PLC vs. Brown Forman | Diageo PLC vs. MGP Ingredients | Diageo PLC vs. Duckhorn Portfolio | Diageo PLC vs. Brown Forman |
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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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