Correlation Between Fevertree Drinks and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Sandfire Resources 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 Sandfire Resources 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 Sandfire Resources Limited, you can compare the effects of market volatilities on Fevertree Drinks and Sandfire Resources 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 Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Sandfire Resources.
Diversification Opportunities for Fevertree Drinks and Sandfire Resources
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fevertree and Sandfire is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks PLC and Sandfire Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Sandfire Resources go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Sandfire Resources
Assuming the 90 days trading horizon Fevertree Drinks PLC is expected to under-perform the Sandfire Resources. In addition to that, Fevertree Drinks is 1.1 times more volatile than Sandfire Resources Limited. It trades about -0.1 of its total potential returns per unit of risk. Sandfire Resources Limited is currently generating about 0.22 per unit of volatility. If you would invest 565.00 in Sandfire Resources Limited on October 25, 2024 and sell it today you would earn a total of 40.00 from holding Sandfire Resources Limited or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Fevertree Drinks PLC vs. Sandfire Resources Limited
Performance |
| Timeline |
| Fevertree Drinks PLC |
| Sandfire Resources |
Fevertree Drinks and Sandfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Sandfire Resources
The main advantage of trading using opposite Fevertree Drinks and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, Sandfire Resources 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.| Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc |
| Sandfire Resources vs. Reinsurance Group of | Sandfire Resources vs. NORWEGIAN AIR SHUT | Sandfire Resources vs. Insurance Australia Group | Sandfire Resources vs. Westinghouse Air Brake |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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