Correlation Between Ecclesiastical Insurance and Mulberry Group
Can any of the company-specific risk be diversified away by investing in both Ecclesiastical Insurance and Mulberry Group 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 Mulberry Group 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 Mulberry Group PLC, you can compare the effects of market volatilities on Ecclesiastical Insurance and Mulberry Group 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 Mulberry Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecclesiastical Insurance and Mulberry Group.
Diversification Opportunities for Ecclesiastical Insurance and Mulberry Group
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ecclesiastical and Mulberry is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ecclesiastical Insurance Offic and Mulberry Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mulberry Group PLC 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 Mulberry Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mulberry Group PLC has no effect on the direction of Ecclesiastical Insurance i.e., Ecclesiastical Insurance and Mulberry Group go up and down completely randomly.
Pair Corralation between Ecclesiastical Insurance and Mulberry Group
Assuming the 90 days trading horizon Ecclesiastical Insurance Office is expected to generate 0.21 times more return on investment than Mulberry Group. However, Ecclesiastical Insurance Office is 4.69 times less risky than Mulberry Group. It trades about 0.06 of its potential returns per unit of risk. Mulberry Group PLC is currently generating about -0.02 per unit of risk. If you would invest 11,656 in Ecclesiastical Insurance Office on September 14, 2024 and sell it today you would earn a total of 1,394 from holding Ecclesiastical Insurance Office or generate 11.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecclesiastical Insurance Offic vs. Mulberry Group PLC
Performance |
| Timeline |
| Ecclesiastical Insurance |
| Mulberry Group PLC |
Ecclesiastical Insurance and Mulberry Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecclesiastical Insurance and Mulberry Group
The main advantage of trading using opposite Ecclesiastical Insurance and Mulberry Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecclesiastical Insurance position performs unexpectedly, Mulberry Group 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 Mulberry Group will offset losses from the drop in Mulberry Group's long position.The idea behind Ecclesiastical Insurance Office and Mulberry Group PLC 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 CEOs Directory module to screen CEOs from public companies around the world.
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