Correlation Between DFS Furniture and Gfinity PLC
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and Gfinity PLC 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 Gfinity PLC 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 Gfinity PLC, you can compare the effects of market volatilities on DFS Furniture and Gfinity PLC 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 Gfinity PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Gfinity PLC.
Diversification Opportunities for DFS Furniture and Gfinity PLC
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DFS and Gfinity is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Gfinity PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfinity PLC 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 Gfinity PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfinity PLC has no effect on the direction of DFS Furniture i.e., DFS Furniture and Gfinity PLC go up and down completely randomly.
Pair Corralation between DFS Furniture and Gfinity PLC
Assuming the 90 days trading horizon DFS Furniture is expected to generate 29.62 times less return on investment than Gfinity PLC. But when comparing it to its historical volatility, DFS Furniture PLC is 10.13 times less risky than Gfinity PLC. It trades about 0.1 of its potential returns per unit of risk. Gfinity PLC is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2.50 in Gfinity PLC on September 25, 2024 and sell it today you would earn a total of 3.00 from holding Gfinity PLC or generate 120.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Gfinity PLC
Performance |
| Timeline |
| DFS Furniture PLC |
| Gfinity PLC |
DFS Furniture and Gfinity PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Gfinity PLC
The main advantage of trading using opposite DFS Furniture and Gfinity PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, Gfinity PLC 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 Gfinity PLC will offset losses from the drop in Gfinity PLC's long position.| DFS Furniture vs. Chocoladefabriken Lindt Spruengli | DFS Furniture vs. Rockwood Realisation PLC | DFS Furniture vs. Toyota Motor Corp | DFS Furniture vs. Johnson Matthey PLC |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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