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
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DFS and Gaming is -0.61. 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 PLC is expected to generate 0.99 times more return on investment than Gaming Realms. However, DFS Furniture PLC is 1.01 times less risky than Gaming Realms. It trades about 0.22 of its potential returns per unit of risk. Gaming Realms plc is currently generating about -0.1 per unit of risk. If you would invest 12,900 in DFS Furniture PLC on September 20, 2024 and sell it today you would earn a total of 1,200 from holding DFS Furniture PLC or generate 9.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| 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. Berkshire Hathaway | DFS Furniture vs. Hyundai Motor | DFS Furniture vs. Samsung Electronics Co | DFS Furniture vs. Samsung Electronics Co |
| Gaming Realms vs. Herald Investment Trust | Gaming Realms vs. Bankers Investment Trust | Gaming Realms vs. Kinnevik Investment AB | Gaming Realms vs. DFS Furniture PLC |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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