Correlation Between Energy and Whitbread Plc
Can any of the company-specific risk be diversified away by investing in both Energy and Whitbread 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 Energy and Whitbread Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy and Water and Whitbread plc, you can compare the effects of market volatilities on Energy and Whitbread 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 Energy with a short position of Whitbread Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy and Whitbread Plc.
Diversification Opportunities for Energy and Whitbread Plc
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Energy and Whitbread is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Energy and Water and Whitbread plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread plc and Energy 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 Energy and Water are associated (or correlated) with Whitbread Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitbread plc has no effect on the direction of Energy i.e., Energy and Whitbread Plc go up and down completely randomly.
Pair Corralation between Energy and Whitbread Plc
Given the investment horizon of 90 days Energy and Water is expected to generate 26.04 times more return on investment than Whitbread Plc. However, Energy is 26.04 times more volatile than Whitbread plc. It trades about 0.11 of its potential returns per unit of risk. Whitbread plc is currently generating about -0.23 per unit of risk. If you would invest 0.32 in Energy and Water on November 2, 2024 and sell it today you would earn a total of 0.03 from holding Energy and Water or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy and Water vs. Whitbread plc
Performance |
| Timeline |
| Energy and Water |
| Whitbread plc |
Energy and Whitbread Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy and Whitbread Plc
The main advantage of trading using opposite Energy and Whitbread Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy position performs unexpectedly, Whitbread 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 Whitbread Plc will offset losses from the drop in Whitbread Plc's long position.| Energy vs. Vow ASA | Energy vs. Eestech | Energy vs. One World Universe | Energy vs. Bion Environmental Technologies |
| Whitbread Plc vs. Marriott International | Whitbread Plc vs. Hilton Worldwide Holdings | Whitbread Plc vs. InterContinental Hotels Group | Whitbread Plc vs. Accor SA |
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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