Correlation Between Informa PLC and RELX PLC
Can any of the company-specific risk be diversified away by investing in both Informa PLC and RELX PLC 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 Informa PLC and RELX PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Informa PLC and RELX PLC, you can compare the effects of market volatilities on Informa PLC and RELX PLC 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 Informa PLC with a short position of RELX PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Informa PLC and RELX PLC.
Diversification Opportunities for Informa PLC and RELX PLC
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Informa and RELX is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Informa PLC and RELX PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELX PLC and Informa 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 Informa PLC are associated (or correlated) with RELX PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELX PLC has no effect on the direction of Informa PLC i.e., Informa PLC and RELX PLC go up and down completely randomly.
Pair Corralation between Informa PLC and RELX PLC
Assuming the 90 days horizon Informa PLC is expected to generate 2.53 times less return on investment than RELX PLC. But when comparing it to its historical volatility, Informa PLC is 1.23 times less risky than RELX PLC. It trades about 0.14 of its potential returns per unit of risk. RELX PLC is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 4,342 in RELX PLC on October 28, 2024 and sell it today you would earn a total of 294.00 from holding RELX PLC or generate 6.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Informa PLC vs. RELX PLC
Performance |
| Timeline |
| Informa PLC |
| RELX PLC |
Informa PLC and RELX PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Informa PLC and RELX PLC
The main advantage of trading using opposite Informa PLC and RELX PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Informa PLC position performs unexpectedly, RELX PLC 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 RELX PLC will offset losses from the drop in RELX PLC's long position.| Informa PLC vs. Perdoceo Education | Informa PLC vs. Spirent Communications plc | Informa PLC vs. Telecom Argentina SA | Informa PLC vs. Charter Communications |
| RELX PLC vs. Relx PLC ADR | RELX PLC vs. Wolters Kluwer NV | RELX PLC vs. WOLTERS KLUWER ADR | RELX PLC vs. Informa 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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