Correlation Between Fevertree Drinks and Metro Bank
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Metro Bank 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 Fevertree Drinks and Metro Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Metro Bank PLC, you can compare the effects of market volatilities on Fevertree Drinks and Metro Bank 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 Fevertree Drinks with a short position of Metro Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Metro Bank.
Diversification Opportunities for Fevertree Drinks and Metro Bank
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fevertree and Metro is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Metro Bank PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Bank PLC and Fevertree Drinks 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 Fevertree Drinks Plc are associated (or correlated) with Metro Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Bank PLC has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Metro Bank go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Metro Bank
Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to under-perform the Metro Bank. But the stock apears to be less risky and, when comparing its historical volatility, Fevertree Drinks Plc is 1.21 times less risky than Metro Bank. The stock trades about -0.01 of its potential returns per unit of risk. The Metro Bank PLC is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 9,290 in Metro Bank PLC on October 23, 2024 and sell it today you would lose (40.00) from holding Metro Bank PLC or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Metro Bank PLC
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Metro Bank PLC |
Fevertree Drinks and Metro Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Metro Bank
The main advantage of trading using opposite Fevertree Drinks and Metro Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, Metro Bank 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 Metro Bank will offset losses from the drop in Metro Bank's long position.| Fevertree Drinks vs. Aeorema Communications Plc | Fevertree Drinks vs. United Internet AG | Fevertree Drinks vs. Gamma Communications PLC | Fevertree Drinks vs. Coor Service Management |
| Metro Bank vs. Associated British Foods | Metro Bank vs. Fevertree Drinks Plc | Metro Bank vs. Premier Foods PLC | Metro Bank vs. Arrow Electronics |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |