Correlation Between Haleon Plc and Avicanna
Can any of the company-specific risk be diversified away by investing in both Haleon Plc and Avicanna 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 Haleon Plc and Avicanna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haleon plc and Avicanna, you can compare the effects of market volatilities on Haleon Plc and Avicanna 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 Haleon Plc with a short position of Avicanna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haleon Plc and Avicanna.
Diversification Opportunities for Haleon Plc and Avicanna
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Haleon and Avicanna is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and Avicanna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avicanna and Haleon 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 Haleon plc are associated (or correlated) with Avicanna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avicanna has no effect on the direction of Haleon Plc i.e., Haleon Plc and Avicanna go up and down completely randomly.
Pair Corralation between Haleon Plc and Avicanna
Considering the 90-day investment horizon Haleon Plc is expected to generate 3.12 times less return on investment than Avicanna. But when comparing it to its historical volatility, Haleon plc is 5.76 times less risky than Avicanna. It trades about 0.05 of its potential returns per unit of risk. Avicanna is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Avicanna on August 30, 2024 and sell it today you would lose (10.00) from holding Avicanna or give up 32.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haleon plc vs. Avicanna
Performance |
| Timeline |
| Haleon plc |
| Avicanna |
Haleon Plc and Avicanna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haleon Plc and Avicanna
The main advantage of trading using opposite Haleon Plc and Avicanna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haleon Plc position performs unexpectedly, Avicanna 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 Avicanna will offset losses from the drop in Avicanna's long position.| Haleon Plc vs. Teva Pharma Industries | Haleon Plc vs. Bausch Health Companies | Haleon Plc vs. Zoetis Inc | Haleon Plc vs. Takeda Pharmaceutical Co |
| Avicanna vs. Green Cures Botanical | Avicanna vs. Cann American Corp | Avicanna vs. Rimrock Gold Corp | Avicanna vs. Galexxy Holdings |
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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