Correlation Between DFS Furniture and Gaming Realms
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and Gaming Realms 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 Gaming Realms 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 Gaming Realms plc, you can compare the effects of market volatilities on DFS Furniture and Gaming Realms 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 Gaming Realms. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Gaming Realms.
Diversification Opportunities for DFS Furniture and Gaming Realms
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DFS and Gaming is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Gaming Realms plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Realms 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 Gaming Realms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Realms plc has no effect on the direction of DFS Furniture i.e., DFS Furniture and Gaming Realms go up and down completely randomly.
Pair Corralation between DFS Furniture and Gaming Realms
Assuming the 90 days trading horizon DFS Furniture is expected to generate 7.7 times less return on investment than Gaming Realms. But when comparing it to its historical volatility, DFS Furniture PLC is 1.1 times less risky than Gaming Realms. It trades about 0.0 of its potential returns per unit of risk. Gaming Realms plc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,780 in Gaming Realms plc on October 28, 2024 and sell it today you would earn a total of 880.00 from holding Gaming Realms plc or generate 31.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Gaming Realms plc
Performance |
| Timeline |
| DFS Furniture PLC |
| Gaming Realms plc |
DFS Furniture and Gaming Realms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Gaming Realms
The main advantage of trading using opposite DFS Furniture and Gaming Realms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, Gaming Realms 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 Gaming Realms will offset losses from the drop in Gaming Realms' long position.| DFS Furniture vs. Impax Asset Management | DFS Furniture vs. Software Circle plc | DFS Furniture vs. Eastman Chemical Co | DFS Furniture vs. Auction Technology Group |
| Gaming Realms vs. Broadridge Financial Solutions | Gaming Realms vs. Jupiter Fund Management | Gaming Realms vs. Molson Coors Beverage | Gaming Realms vs. Evolution Gaming Group |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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