Correlation Between Gamma Communications and Reckitt Benckiser
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Reckitt Benckiser 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 Gamma Communications and Reckitt Benckiser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamma Communications PLC and Reckitt Benckiser Group, you can compare the effects of market volatilities on Gamma Communications and Reckitt Benckiser 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 Gamma Communications with a short position of Reckitt Benckiser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Reckitt Benckiser.
Diversification Opportunities for Gamma Communications and Reckitt Benckiser
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gamma and Reckitt is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications PLC and Reckitt Benckiser Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reckitt Benckiser and Gamma Communications 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 Gamma Communications PLC are associated (or correlated) with Reckitt Benckiser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reckitt Benckiser has no effect on the direction of Gamma Communications i.e., Gamma Communications and Reckitt Benckiser go up and down completely randomly.
Pair Corralation between Gamma Communications and Reckitt Benckiser
Assuming the 90 days trading horizon Gamma Communications PLC is expected to under-perform the Reckitt Benckiser. In addition to that, Gamma Communications is 1.09 times more volatile than Reckitt Benckiser Group. It trades about -0.51 of its total potential returns per unit of risk. Reckitt Benckiser Group is currently generating about 0.24 per unit of volatility. If you would invest 470,900 in Reckitt Benckiser Group on October 7, 2024 and sell it today you would earn a total of 16,000 from holding Reckitt Benckiser Group or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications PLC vs. Reckitt Benckiser Group
Performance |
| Timeline |
| Gamma Communications PLC |
| Reckitt Benckiser |
Gamma Communications and Reckitt Benckiser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Reckitt Benckiser
The main advantage of trading using opposite Gamma Communications and Reckitt Benckiser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Reckitt Benckiser 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 Reckitt Benckiser will offset losses from the drop in Reckitt Benckiser's long position.| Gamma Communications vs. Sovereign Metals | Gamma Communications vs. Auto Trader Group | Gamma Communications vs. Flow Traders NV | Gamma Communications vs. Empire Metals Limited |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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