Correlation Between Fevertree Drinks and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and XLMedia 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 Fevertree Drinks and XLMedia PLC 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 XLMedia PLC, you can compare the effects of market volatilities on Fevertree Drinks and XLMedia 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 Fevertree Drinks with a short position of XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and XLMedia PLC.
Diversification Opportunities for Fevertree Drinks and XLMedia PLC
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fevertree and XLMedia is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and XLMedia PLC go up and down completely randomly.
Pair Corralation between Fevertree Drinks and XLMedia PLC
Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to under-perform the XLMedia PLC. In addition to that, Fevertree Drinks is 1.32 times more volatile than XLMedia PLC. It trades about -0.18 of its total potential returns per unit of risk. XLMedia PLC is currently generating about 0.07 per unit of volatility. If you would invest 1,163 in XLMedia PLC on August 28, 2024 and sell it today you would earn a total of 22.00 from holding XLMedia PLC or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. XLMedia PLC
Performance |
| Timeline |
| Fevertree Drinks Plc |
| XLMedia PLC |
Fevertree Drinks and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and XLMedia PLC
The main advantage of trading using opposite Fevertree Drinks and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, XLMedia 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Fevertree Drinks vs. Taylor Maritime Investments | Fevertree Drinks vs. Direct Line Insurance | Fevertree Drinks vs. Samsung Electronics Co | Fevertree Drinks vs. Lords Grp Trading |
| XLMedia PLC vs. Samsung Electronics Co | XLMedia PLC vs. Samsung Electronics Co | XLMedia PLC vs. Hyundai Motor | XLMedia PLC vs. Toyota Motor Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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