Correlation Between Glanbia PLC and Greencoat Renewables
Can any of the company-specific risk be diversified away by investing in both Glanbia PLC and Greencoat Renewables 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 Glanbia PLC and Greencoat Renewables into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glanbia PLC and Greencoat Renewables PLC, you can compare the effects of market volatilities on Glanbia PLC and Greencoat Renewables 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 Glanbia PLC with a short position of Greencoat Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glanbia PLC and Greencoat Renewables.
Diversification Opportunities for Glanbia PLC and Greencoat Renewables
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Glanbia and Greencoat is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Glanbia PLC and Greencoat Renewables PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greencoat Renewables PLC and Glanbia PLC 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 Glanbia PLC are associated (or correlated) with Greencoat Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greencoat Renewables PLC has no effect on the direction of Glanbia PLC i.e., Glanbia PLC and Greencoat Renewables go up and down completely randomly.
Pair Corralation between Glanbia PLC and Greencoat Renewables
Assuming the 90 days trading horizon Glanbia PLC is expected to under-perform the Greencoat Renewables. In addition to that, Glanbia PLC is 4.23 times more volatile than Greencoat Renewables PLC. It trades about -0.17 of its total potential returns per unit of risk. Greencoat Renewables PLC is currently generating about 0.01 per unit of volatility. If you would invest 78.00 in Greencoat Renewables PLC on November 28, 2024 and sell it today you would earn a total of 0.00 from holding Greencoat Renewables PLC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glanbia PLC vs. Greencoat Renewables PLC
Performance |
| Timeline |
| Glanbia PLC |
| Greencoat Renewables PLC |
Glanbia PLC and Greencoat Renewables Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glanbia PLC and Greencoat Renewables
The main advantage of trading using opposite Glanbia PLC and Greencoat Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glanbia PLC position performs unexpectedly, Greencoat Renewables 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 Greencoat Renewables will offset losses from the drop in Greencoat Renewables' long position.The idea behind Glanbia PLC and Greencoat Renewables PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Greencoat Renewables vs. Dalata Hotel Group | Greencoat Renewables vs. AIB Group PLC | Greencoat Renewables vs. Glanbia PLC |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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