Correlation Between DFS Furniture and Neometals
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and Neometals 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 Neometals 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 Neometals, you can compare the effects of market volatilities on DFS Furniture and Neometals 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 Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Neometals.
Diversification Opportunities for DFS Furniture and Neometals
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between DFS and Neometals is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of DFS Furniture i.e., DFS Furniture and Neometals go up and down completely randomly.
Pair Corralation between DFS Furniture and Neometals
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 0.45 times more return on investment than Neometals. However, DFS Furniture PLC is 2.21 times less risky than Neometals. It trades about 0.15 of its potential returns per unit of risk. Neometals is currently generating about 0.04 per unit of risk. If you would invest 11,960 in DFS Furniture PLC on September 12, 2024 and sell it today you would earn a total of 2,420 from holding DFS Furniture PLC or generate 20.23% 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. Neometals
Performance |
| Timeline |
| DFS Furniture PLC |
| Neometals |
DFS Furniture and Neometals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Neometals
The main advantage of trading using opposite DFS Furniture and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' long position.| DFS Furniture vs. Berkshire Hathaway | DFS Furniture vs. Hyundai Motor | DFS Furniture vs. Samsung Electronics Co | DFS Furniture vs. Samsung Electronics Co |
| Neometals vs. DFS Furniture PLC | Neometals vs. MyHealthChecked Plc | Neometals vs. Bellevue Healthcare Trust | Neometals vs. Universal Health Services |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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