Correlation Between Plastic Omnium and CENTRICA ADR
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium and CENTRICA ADR 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 Plastic Omnium and CENTRICA ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and CENTRICA ADR NEW, you can compare the effects of market volatilities on Plastic Omnium and CENTRICA ADR 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 Plastic Omnium with a short position of CENTRICA ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and CENTRICA ADR.
Diversification Opportunities for Plastic Omnium and CENTRICA ADR
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Plastic and CENTRICA is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and CENTRICA ADR NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTRICA ADR NEW and Plastic Omnium 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 Plastic Omnium are associated (or correlated) with CENTRICA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTRICA ADR NEW has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and CENTRICA ADR go up and down completely randomly.
Pair Corralation between Plastic Omnium and CENTRICA ADR
Assuming the 90 days trading horizon Plastic Omnium is expected to generate 1.24 times less return on investment than CENTRICA ADR. In addition to that, Plastic Omnium is 2.34 times more volatile than CENTRICA ADR NEW. It trades about 0.14 of its total potential returns per unit of risk. CENTRICA ADR NEW is currently generating about 0.42 per unit of volatility. If you would invest 540.00 in CENTRICA ADR NEW on September 13, 2024 and sell it today you would earn a total of 70.00 from holding CENTRICA ADR NEW or generate 12.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Plastic Omnium vs. CENTRICA ADR NEW
Performance |
| Timeline |
| Plastic Omnium |
| CENTRICA ADR NEW |
Plastic Omnium and CENTRICA ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and CENTRICA ADR
The main advantage of trading using opposite Plastic Omnium and CENTRICA ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium position performs unexpectedly, CENTRICA ADR 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 CENTRICA ADR will offset losses from the drop in CENTRICA ADR's long position.| Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc |
| CENTRICA ADR vs. PennantPark Investment | CENTRICA ADR vs. CENTURIA OFFICE REIT | CENTRICA ADR vs. SEI INVESTMENTS | CENTRICA ADR vs. WisdomTree Investments |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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