Correlation Between DFS Furniture and DFDS AS
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and DFDS AS 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 DFS Furniture and DFDS AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and DFDS AS, you can compare the effects of market volatilities on DFS Furniture and DFDS AS 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 DFS Furniture with a short position of DFDS AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and DFDS AS.
Diversification Opportunities for DFS Furniture and DFDS AS
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DFS and DFDS is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and DFDS AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFDS AS and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with DFDS AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFDS AS has no effect on the direction of DFS Furniture i.e., DFS Furniture and DFDS AS go up and down completely randomly.
Pair Corralation between DFS Furniture and DFDS AS
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 1.58 times more return on investment than DFDS AS. However, DFS Furniture is 1.58 times more volatile than DFDS AS. It trades about -0.02 of its potential returns per unit of risk. DFDS AS is currently generating about -0.07 per unit of risk. If you would invest 166.00 in DFS Furniture PLC on October 25, 2024 and sell it today you would lose (4.00) from holding DFS Furniture PLC or give up 2.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. DFDS AS
Performance |
| Timeline |
| DFS Furniture PLC |
| DFDS AS |
DFS Furniture and DFDS AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and DFDS AS
The main advantage of trading using opposite DFS Furniture and DFDS AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, DFDS AS 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 DFDS AS will offset losses from the drop in DFDS AS's long position.| DFS Furniture vs. Fevertree Drinks PLC | DFS Furniture vs. Monster Beverage Corp | DFS Furniture vs. Insteel Industries | DFS Furniture vs. MOLSON RS BEVERAGE |
| DFDS AS vs. Chesapeake Utilities | DFDS AS vs. NAKED WINES PLC | DFDS AS vs. PICKN PAY STORES | DFDS AS vs. Marie Brizard Wine |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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