Correlation Between Fevertree Drinks and Ashtead Group
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Ashtead Group 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 Ashtead Group 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 Ashtead Group plc, you can compare the effects of market volatilities on Fevertree Drinks and Ashtead Group 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 Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Ashtead Group.
Diversification Opportunities for Fevertree Drinks and Ashtead Group
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fevertree and Ashtead is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks PLC and Ashtead Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group 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 Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group plc has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Ashtead Group go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Ashtead Group
Assuming the 90 days trading horizon Fevertree Drinks PLC is expected to under-perform the Ashtead Group. In addition to that, Fevertree Drinks is 1.2 times more volatile than Ashtead Group plc. It trades about -0.1 of its total potential returns per unit of risk. Ashtead Group plc is currently generating about 0.26 per unit of volatility. If you would invest 6,850 in Ashtead Group plc on September 2, 2024 and sell it today you would earn a total of 700.00 from holding Ashtead Group plc or generate 10.22% 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. Ashtead Group plc
Performance |
| Timeline |
| Fevertree Drinks PLC |
| Ashtead Group plc |
Fevertree Drinks and Ashtead Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Ashtead Group
The main advantage of trading using opposite Fevertree Drinks and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, Ashtead Group 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 Ashtead Group will offset losses from the drop in Ashtead Group's long position.| Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc |
| Ashtead Group vs. MOVIE GAMES SA | Ashtead Group vs. Ares Management Corp | Ashtead Group vs. Perdoceo Education | Ashtead Group vs. Sims Metal Management |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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