Correlation Between Gaming Realms and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both Gaming Realms and Cairn Homes 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 Gaming Realms and Cairn Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming Realms plc and Cairn Homes PLC, you can compare the effects of market volatilities on Gaming Realms and Cairn Homes 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 Gaming Realms with a short position of Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Realms and Cairn Homes.
Diversification Opportunities for Gaming Realms and Cairn Homes
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gaming and Cairn is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC and Gaming Realms 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 Gaming Realms plc are associated (or correlated) with Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Gaming Realms i.e., Gaming Realms and Cairn Homes go up and down completely randomly.
Pair Corralation between Gaming Realms and Cairn Homes
Assuming the 90 days trading horizon Gaming Realms is expected to generate 2.15 times less return on investment than Cairn Homes. In addition to that, Gaming Realms is 1.39 times more volatile than Cairn Homes PLC. It trades about 0.03 of its total potential returns per unit of risk. Cairn Homes PLC is currently generating about 0.1 per unit of volatility. If you would invest 7,769 in Cairn Homes PLC on October 28, 2024 and sell it today you would earn a total of 10,111 from holding Cairn Homes PLC or generate 130.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Gaming Realms plc vs. Cairn Homes PLC
Performance |
| Timeline |
| Gaming Realms plc |
| Cairn Homes PLC |
Gaming Realms and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming Realms and Cairn Homes
The main advantage of trading using opposite Gaming Realms and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Realms position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| Gaming Realms vs. Broadridge Financial Solutions | Gaming Realms vs. Jupiter Fund Management | Gaming Realms vs. Molson Coors Beverage | Gaming Realms vs. Evolution Gaming Group |
| Cairn Homes vs. Systemair AB | Cairn Homes vs. Litigation Capital Management | Cairn Homes vs. Sovereign Metals | Cairn Homes vs. Fulcrum Metals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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