Correlation Between Ecclesiastical Insurance and Associated British
Can any of the company-specific risk be diversified away by investing in both Ecclesiastical Insurance and Associated British 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 Ecclesiastical Insurance and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecclesiastical Insurance Office and Associated British Foods, you can compare the effects of market volatilities on Ecclesiastical Insurance and Associated British 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 Ecclesiastical Insurance with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecclesiastical Insurance and Associated British.
Diversification Opportunities for Ecclesiastical Insurance and Associated British
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ecclesiastical and Associated is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ecclesiastical Insurance Offic and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and Ecclesiastical Insurance 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 Ecclesiastical Insurance Office are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Ecclesiastical Insurance i.e., Ecclesiastical Insurance and Associated British go up and down completely randomly.
Pair Corralation between Ecclesiastical Insurance and Associated British
Assuming the 90 days trading horizon Ecclesiastical Insurance Office is expected to generate 1.18 times more return on investment than Associated British. However, Ecclesiastical Insurance is 1.18 times more volatile than Associated British Foods. It trades about 0.0 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.14 per unit of risk. If you would invest 13,164 in Ecclesiastical Insurance Office on September 19, 2024 and sell it today you would lose (14.00) from holding Ecclesiastical Insurance Office or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecclesiastical Insurance Offic vs. Associated British Foods
Performance |
| Timeline |
| Ecclesiastical Insurance |
| Associated British Foods |
Ecclesiastical Insurance and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecclesiastical Insurance and Associated British
The main advantage of trading using opposite Ecclesiastical Insurance and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecclesiastical Insurance position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.The idea behind Ecclesiastical Insurance Office and Associated British Foods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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