Correlation Between Eat Beyond and Reckitt Benckiser
Can any of the company-specific risk be diversified away by investing in both Eat Beyond and Reckitt Benckiser 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 Eat Beyond and Reckitt Benckiser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eat Beyond Global and Reckitt Benckiser Group, you can compare the effects of market volatilities on Eat Beyond and Reckitt Benckiser 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 Eat Beyond with a short position of Reckitt Benckiser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eat Beyond and Reckitt Benckiser.
Diversification Opportunities for Eat Beyond and Reckitt Benckiser
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eat and Reckitt is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eat Beyond Global and Reckitt Benckiser Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reckitt Benckiser and Eat Beyond 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 Eat Beyond Global are associated (or correlated) with Reckitt Benckiser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reckitt Benckiser has no effect on the direction of Eat Beyond i.e., Eat Beyond and Reckitt Benckiser go up and down completely randomly.
Pair Corralation between Eat Beyond and Reckitt Benckiser
Assuming the 90 days horizon Eat Beyond Global is expected to generate 26.97 times more return on investment than Reckitt Benckiser. However, Eat Beyond is 26.97 times more volatile than Reckitt Benckiser Group. It trades about 0.22 of its potential returns per unit of risk. Reckitt Benckiser Group is currently generating about -0.05 per unit of risk. If you would invest 4.10 in Eat Beyond Global on August 26, 2024 and sell it today you would earn a total of 5.30 from holding Eat Beyond Global or generate 129.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eat Beyond Global vs. Reckitt Benckiser Group
Performance |
| Timeline |
| Eat Beyond Global |
| Reckitt Benckiser |
Eat Beyond and Reckitt Benckiser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eat Beyond and Reckitt Benckiser
The main advantage of trading using opposite Eat Beyond and Reckitt Benckiser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eat Beyond position performs unexpectedly, Reckitt Benckiser 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 Reckitt Benckiser will offset losses from the drop in Reckitt Benckiser's long position.| Eat Beyond vs. Blackstone Group | Eat Beyond vs. BlackRock | Eat Beyond vs. Apollo Global Management | Eat Beyond vs. Investor AB ser |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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