Correlation Between Halma Plc and REVO INSURANCE
Can any of the company-specific risk be diversified away by investing in both Halma Plc and REVO INSURANCE 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 Halma Plc and REVO INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halma plc and REVO INSURANCE SPA, you can compare the effects of market volatilities on Halma Plc and REVO INSURANCE 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 Halma Plc with a short position of REVO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halma Plc and REVO INSURANCE.
Diversification Opportunities for Halma Plc and REVO INSURANCE
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Halma and REVO is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Halma plc and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA and Halma 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 Halma plc are associated (or correlated) with REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of Halma Plc i.e., Halma Plc and REVO INSURANCE go up and down completely randomly.
Pair Corralation between Halma Plc and REVO INSURANCE
Assuming the 90 days horizon Halma plc is expected to generate 0.42 times more return on investment than REVO INSURANCE. However, Halma plc is 2.38 times less risky than REVO INSURANCE. It trades about -0.1 of its potential returns per unit of risk. REVO INSURANCE SPA is currently generating about -0.07 per unit of risk. If you would invest 3,277 in Halma plc on October 17, 2024 and sell it today you would lose (105.00) from holding Halma plc or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Halma plc vs. REVO INSURANCE SPA
Performance |
| Timeline |
| Halma plc |
| REVO INSURANCE SPA |
Halma Plc and REVO INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Halma Plc and REVO INSURANCE
The main advantage of trading using opposite Halma Plc and REVO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halma Plc position performs unexpectedly, REVO INSURANCE 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 REVO INSURANCE will offset losses from the drop in REVO INSURANCE's long position.| Halma Plc vs. NH HOTEL GROUP | Halma Plc vs. Park Hotels Resorts | Halma Plc vs. Singapore Reinsurance | Halma Plc vs. The Hanover Insurance |
| REVO INSURANCE vs. UNIVERSAL MUSIC GROUP | REVO INSURANCE vs. MARKET VECTR RETAIL | REVO INSURANCE vs. Indutrade AB | REVO INSURANCE vs. CARSALESCOM |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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