Correlation Between Diageo PLC and SunLink Health
Can any of the company-specific risk be diversified away by investing in both Diageo PLC and SunLink Health 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 SunLink Health 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 SunLink Health Systems, you can compare the effects of market volatilities on Diageo PLC and SunLink Health 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 SunLink Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and SunLink Health.
Diversification Opportunities for Diageo PLC and SunLink Health
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Diageo and SunLink is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC ADR and SunLink Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunLink Health Systems 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 SunLink Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunLink Health Systems has no effect on the direction of Diageo PLC i.e., Diageo PLC and SunLink Health go up and down completely randomly.
Pair Corralation between Diageo PLC and SunLink Health
Considering the 90-day investment horizon Diageo PLC ADR is expected to under-perform the SunLink Health. But the stock apears to be less risky and, when comparing its historical volatility, Diageo PLC ADR is 3.21 times less risky than SunLink Health. The stock trades about -0.04 of its potential returns per unit of risk. The SunLink Health Systems is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 79.00 in SunLink Health Systems on August 29, 2024 and sell it today you would lose (4.00) from holding SunLink Health Systems or give up 5.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diageo PLC ADR vs. SunLink Health Systems
Performance |
| Timeline |
| Diageo PLC ADR |
| SunLink Health Systems |
Diageo PLC and SunLink Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diageo PLC and SunLink Health
The main advantage of trading using opposite Diageo PLC and SunLink Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo PLC position performs unexpectedly, SunLink Health 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 SunLink Health will offset losses from the drop in SunLink Health's long position.| Diageo PLC vs. Brown Forman | Diageo PLC vs. MGP Ingredients | Diageo PLC vs. Duckhorn Portfolio | Diageo PLC vs. Brown Forman |
| SunLink Health vs. Leafly Holdings | SunLink Health vs. Allstar Health Brands | SunLink Health vs. Leafly Holdings | SunLink Health vs. Kiaro Holdings Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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