Correlation Between DFS Furniture and Aberforth Smaller
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and Aberforth Smaller 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 Aberforth Smaller 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 Aberforth Smaller Companies, you can compare the effects of market volatilities on DFS Furniture and Aberforth Smaller 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 Aberforth Smaller. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Aberforth Smaller.
Diversification Opportunities for DFS Furniture and Aberforth Smaller
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DFS and Aberforth is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Aberforth Smaller Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberforth Smaller 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 Aberforth Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberforth Smaller has no effect on the direction of DFS Furniture i.e., DFS Furniture and Aberforth Smaller go up and down completely randomly.
Pair Corralation between DFS Furniture and Aberforth Smaller
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 1.59 times more return on investment than Aberforth Smaller. However, DFS Furniture is 1.59 times more volatile than Aberforth Smaller Companies. It trades about 0.12 of its potential returns per unit of risk. Aberforth Smaller Companies is currently generating about -0.03 per unit of risk. If you would invest 13,900 in DFS Furniture PLC on October 20, 2024 and sell it today you would earn a total of 600.00 from holding DFS Furniture PLC or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Aberforth Smaller Companies
Performance |
| Timeline |
| DFS Furniture PLC |
| Aberforth Smaller |
DFS Furniture and Aberforth Smaller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Aberforth Smaller
The main advantage of trading using opposite DFS Furniture and Aberforth Smaller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, Aberforth Smaller 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 Aberforth Smaller will offset losses from the drop in Aberforth Smaller's long position.| DFS Furniture vs. International Biotechnology Trust | DFS Furniture vs. Manulife Financial Corp | DFS Furniture vs. Dairy Farm International | DFS Furniture vs. Sydbank |
| Aberforth Smaller vs. Cembra Money Bank | Aberforth Smaller vs. Moneta Money Bank | Aberforth Smaller vs. Discover Financial Services | Aberforth Smaller vs. Symphony Environmental Technologies |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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