Correlation Between Fevertree Drinks and Octopus Aim
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Octopus Aim 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 Octopus Aim 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 Octopus Aim Vct, you can compare the effects of market volatilities on Fevertree Drinks and Octopus Aim 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 Octopus Aim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Octopus Aim.
Diversification Opportunities for Fevertree Drinks and Octopus Aim
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fevertree and Octopus is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Octopus Aim Vct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Octopus Aim Vct 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 Octopus Aim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Octopus Aim Vct has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Octopus Aim go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Octopus Aim
Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to generate 10.41 times more return on investment than Octopus Aim. However, Fevertree Drinks is 10.41 times more volatile than Octopus Aim Vct. It trades about 0.21 of its potential returns per unit of risk. Octopus Aim Vct is currently generating about -0.1 per unit of risk. If you would invest 66,050 in Fevertree Drinks Plc on November 5, 2024 and sell it today you would earn a total of 13,950 from holding Fevertree Drinks Plc or generate 21.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Octopus Aim Vct
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Octopus Aim Vct |
Fevertree Drinks and Octopus Aim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Octopus Aim
The main advantage of trading using opposite Fevertree Drinks and Octopus Aim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, Octopus Aim 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 Octopus Aim will offset losses from the drop in Octopus Aim's long position.| Fevertree Drinks vs. Samsung Electronics Co | Fevertree Drinks vs. Samsung Electronics Co | Fevertree Drinks vs. Toyota Motor Corp | Fevertree Drinks vs. MOL Hungarian Oil |
| Octopus Aim vs. Endeavour Mining Corp | Octopus Aim vs. Scottish American Investment | Octopus Aim vs. Herald Investment Trust | Octopus Aim vs. OneSavings Bank 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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