Correlation Between Diageo PLC and Hilton Food
Can any of the company-specific risk be diversified away by investing in both Diageo PLC and Hilton Food 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 Diageo PLC and Hilton Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diageo PLC and Hilton Food Group, you can compare the effects of market volatilities on Diageo PLC and Hilton Food 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 Diageo PLC with a short position of Hilton Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and Hilton Food.
Diversification Opportunities for Diageo PLC and Hilton Food
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Diageo and Hilton is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC and Hilton Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Food Group and Diageo PLC 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 Diageo PLC are associated (or correlated) with Hilton Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Food Group has no effect on the direction of Diageo PLC i.e., Diageo PLC and Hilton Food go up and down completely randomly.
Pair Corralation between Diageo PLC and Hilton Food
Assuming the 90 days trading horizon Diageo PLC is expected to under-perform the Hilton Food. But the stock apears to be less risky and, when comparing its historical volatility, Diageo PLC is 1.28 times less risky than Hilton Food. The stock trades about -0.04 of its potential returns per unit of risk. The Hilton Food Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 50,977 in Hilton Food Group on September 13, 2024 and sell it today you would earn a total of 41,423 from holding Hilton Food Group or generate 81.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Diageo PLC vs. Hilton Food Group
Performance |
| Timeline |
| Diageo PLC |
| Hilton Food Group |
Diageo PLC and Hilton Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diageo PLC and Hilton Food
The main advantage of trading using opposite Diageo PLC and Hilton Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo PLC position performs unexpectedly, Hilton Food 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 Hilton Food will offset losses from the drop in Hilton Food's long position.| Diageo PLC vs. Hilton Food Group | Diageo PLC vs. Roebuck Food Group | Diageo PLC vs. Edita Food Industries | Diageo PLC vs. Broadcom |
| Hilton Food vs. MTI Wireless Edge | Hilton Food vs. AcadeMedia AB | Hilton Food vs. Fonix Mobile plc | Hilton Food vs. mobilezone holding AG |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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