Correlation Between Haleon Plc and CLS Holdings
Can any of the company-specific risk be diversified away by investing in both Haleon Plc and CLS Holdings 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 CLS Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haleon plc and CLS Holdings USA, you can compare the effects of market volatilities on Haleon Plc and CLS Holdings 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 CLS Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haleon Plc and CLS Holdings.
Diversification Opportunities for Haleon Plc and CLS Holdings
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Haleon and CLS is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and CLS Holdings USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLS Holdings USA 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 CLS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLS Holdings USA has no effect on the direction of Haleon Plc i.e., Haleon Plc and CLS Holdings go up and down completely randomly.
Pair Corralation between Haleon Plc and CLS Holdings
Assuming the 90 days horizon Haleon Plc is expected to generate 4.06 times less return on investment than CLS Holdings. But when comparing it to its historical volatility, Haleon plc is 6.73 times less risky than CLS Holdings. It trades about 0.07 of its potential returns per unit of risk. CLS Holdings USA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5.21 in CLS Holdings USA on September 1, 2024 and sell it today you would lose (0.92) from holding CLS Holdings USA or give up 17.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Haleon plc vs. CLS Holdings USA
Performance |
| Timeline |
| Haleon plc |
| CLS Holdings USA |
Haleon Plc and CLS Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haleon Plc and CLS Holdings
The main advantage of trading using opposite Haleon Plc and CLS Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haleon Plc position performs unexpectedly, CLS Holdings 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 CLS Holdings will offset losses from the drop in CLS Holdings' long position.| Haleon Plc vs. Rimrock Gold Corp | Haleon Plc vs. Link Reservations | Haleon Plc vs. Marijuana | Haleon Plc vs. Greater Cannabis |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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