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 ADR, 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
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Informa and Relx is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Informa PLC and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR 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 ADR 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 under-perform the Relx PLC. In addition to that, Informa PLC is 1.18 times more volatile than Relx PLC ADR. It trades about -0.3 of its total potential returns per unit of risk. Relx PLC ADR is currently generating about 0.1 per unit of volatility. If you would invest 4,460 in Relx PLC ADR on October 15, 2024 and sell it today you would earn a total of 60.00 from holding Relx PLC ADR or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Informa PLC vs. Relx PLC ADR
Performance |
| Timeline |
| Informa PLC |
| Relx PLC ADR |
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. MICRONIC MYDATA | Informa PLC vs. NTT DATA | Informa PLC vs. EEDUCATION ALBERT AB | Informa PLC vs. Xinhua Winshare Publishing |
| Relx PLC vs. NH HOTEL GROUP | Relx PLC vs. PLAYMATES TOYS | Relx PLC vs. DALATA HOTEL | Relx PLC vs. GigaMedia |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |