Correlation Between Greif, and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both Greif, and Diageo 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 Greif, and Diageo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greif, Inc and Diageo PLC ADR, you can compare the effects of market volatilities on Greif, and Diageo 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 Greif, with a short position of Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greif, and Diageo PLC.
Diversification Opportunities for Greif, and Diageo PLC
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Greif, and Diageo is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Greif, Inc and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR and Greif, 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 Greif, Inc are associated (or correlated) with Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of Greif, i.e., Greif, and Diageo PLC go up and down completely randomly.
Pair Corralation between Greif, and Diageo PLC
Given the investment horizon of 90 days Greif, is expected to generate 5.34 times less return on investment than Diageo PLC. But when comparing it to its historical volatility, Greif, Inc is 1.14 times less risky than Diageo PLC. It trades about 0.05 of its potential returns per unit of risk. Diageo PLC ADR is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 11,915 in Diageo PLC ADR on September 14, 2024 and sell it today you would earn a total of 755.00 from holding Diageo PLC ADR or generate 6.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greif, Inc vs. Diageo PLC ADR
Performance |
| Timeline |
| Greif, Inc |
| Diageo PLC ADR |
Greif, and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greif, and Diageo PLC
The main advantage of trading using opposite Greif, and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greif, position performs unexpectedly, Diageo 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| Greif, vs. Magnite | Greif, vs. Entravision Communications | Greif, vs. CarsalesCom Ltd ADR | Greif, vs. GEN Restaurant Group, |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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