Correlation Between Element Solutions and Bunzl Plc
Can any of the company-specific risk be diversified away by investing in both Element Solutions and Bunzl 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 Element Solutions and Bunzl Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Solutions and Bunzl plc, you can compare the effects of market volatilities on Element Solutions and Bunzl 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 Element Solutions with a short position of Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and Bunzl Plc.
Diversification Opportunities for Element Solutions and Bunzl Plc
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Element and Bunzl is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc and Element Solutions 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 Element Solutions are associated (or correlated) with Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of Element Solutions i.e., Element Solutions and Bunzl Plc go up and down completely randomly.
Pair Corralation between Element Solutions and Bunzl Plc
Considering the 90-day investment horizon Element Solutions is expected to generate 1.25 times more return on investment than Bunzl Plc. However, Element Solutions is 1.25 times more volatile than Bunzl plc. It trades about 0.2 of its potential returns per unit of risk. Bunzl plc is currently generating about -0.04 per unit of risk. If you would invest 2,667 in Element Solutions on August 29, 2024 and sell it today you would earn a total of 198.00 from holding Element Solutions or generate 7.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Solutions vs. Bunzl plc
Performance |
| Timeline |
| Element Solutions |
| Bunzl plc |
Element Solutions and Bunzl Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Solutions and Bunzl Plc
The main advantage of trading using opposite Element Solutions and Bunzl Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Solutions position performs unexpectedly, Bunzl 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 Bunzl Plc will offset losses from the drop in Bunzl Plc's long position.| Element Solutions vs. Oil Dri | Element Solutions vs. Quaker Chemical | Element Solutions vs. Ecovyst | Element Solutions vs. Minerals Technologies |
| Bunzl Plc vs. Associated British Foods | Bunzl Plc vs. Compass Group PLC | Bunzl Plc vs. Ashtead Gro | Bunzl Plc vs. Kerry Group PLC |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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