Correlation Between DFS Furniture and Inchcape PLC
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and Inchcape 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 Inchcape 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 Inchcape PLC, you can compare the effects of market volatilities on DFS Furniture and Inchcape 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 Inchcape PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Inchcape PLC.
Diversification Opportunities for DFS Furniture and Inchcape PLC
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DFS and Inchcape is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Inchcape PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inchcape 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 Inchcape PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inchcape PLC has no effect on the direction of DFS Furniture i.e., DFS Furniture and Inchcape PLC go up and down completely randomly.
Pair Corralation between DFS Furniture and Inchcape PLC
Assuming the 90 days trading horizon DFS Furniture is expected to generate 1.13 times less return on investment than Inchcape PLC. In addition to that, DFS Furniture is 1.22 times more volatile than Inchcape PLC. It trades about 0.01 of its total potential returns per unit of risk. Inchcape PLC is currently generating about 0.01 per unit of volatility. If you would invest 75,432 in Inchcape PLC on September 4, 2024 and sell it today you would earn a total of 1,768 from holding Inchcape PLC or generate 2.34% 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. Inchcape PLC
Performance |
| Timeline |
| DFS Furniture PLC |
| Inchcape PLC |
DFS Furniture and Inchcape PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Inchcape PLC
The main advantage of trading using opposite DFS Furniture and Inchcape PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, Inchcape 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 Inchcape PLC will offset losses from the drop in Inchcape PLC's long position.| DFS Furniture vs. Gamma Communications PLC | DFS Furniture vs. Mindflair Plc | DFS Furniture vs. Norwegian Air Shuttle | DFS Furniture vs. Scandic Hotels Group |
| Inchcape PLC vs. Electronic Arts | Inchcape PLC vs. Molson Coors Beverage | Inchcape PLC vs. Supermarket Income REIT | Inchcape PLC vs. Compal Electronics GDR |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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