Correlation Between Fevertree Drinks and EMPLOYERS HLDGS
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and EMPLOYERS HLDGS 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 EMPLOYERS HLDGS 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 EMPLOYERS HLDGS DL, you can compare the effects of market volatilities on Fevertree Drinks and EMPLOYERS HLDGS 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 EMPLOYERS HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and EMPLOYERS HLDGS.
Diversification Opportunities for Fevertree Drinks and EMPLOYERS HLDGS
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fevertree and EMPLOYERS is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks PLC and EMPLOYERS HLDGS DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMPLOYERS HLDGS DL 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 EMPLOYERS HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMPLOYERS HLDGS DL has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and EMPLOYERS HLDGS go up and down completely randomly.
Pair Corralation between Fevertree Drinks and EMPLOYERS HLDGS
Assuming the 90 days trading horizon Fevertree Drinks PLC is expected to generate 3.17 times more return on investment than EMPLOYERS HLDGS. However, Fevertree Drinks is 3.17 times more volatile than EMPLOYERS HLDGS DL. It trades about 0.01 of its potential returns per unit of risk. EMPLOYERS HLDGS DL is currently generating about -0.11 per unit of risk. If you would invest 880.00 in Fevertree Drinks PLC on November 8, 2024 and sell it today you would lose (10.00) from holding Fevertree Drinks PLC or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks PLC vs. EMPLOYERS HLDGS DL
Performance |
| Timeline |
| Fevertree Drinks PLC |
| EMPLOYERS HLDGS DL |
Fevertree Drinks and EMPLOYERS HLDGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and EMPLOYERS HLDGS
The main advantage of trading using opposite Fevertree Drinks and EMPLOYERS HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, EMPLOYERS HLDGS 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 EMPLOYERS HLDGS will offset losses from the drop in EMPLOYERS HLDGS's long position.| Fevertree Drinks vs. Rayonier Advanced Materials | Fevertree Drinks vs. Mitsubishi Materials | Fevertree Drinks vs. Japan Tobacco | Fevertree Drinks vs. The Yokohama Rubber |
| EMPLOYERS HLDGS vs. Mapfre SA | EMPLOYERS HLDGS vs. First American Financial | EMPLOYERS HLDGS vs. MGIC Investment | EMPLOYERS HLDGS vs. Assured Guaranty |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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