Correlation Between Informa PLC and Sage Group
Can any of the company-specific risk be diversified away by investing in both Informa PLC and Sage Group 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 Sage Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Informa PLC ADR and Sage Group PLC, you can compare the effects of market volatilities on Informa PLC and Sage Group 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 Sage Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Informa PLC and Sage Group.
Diversification Opportunities for Informa PLC and Sage Group
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Informa and Sage is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Informa PLC ADR and Sage Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Group 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 ADR are associated (or correlated) with Sage Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Group PLC has no effect on the direction of Informa PLC i.e., Informa PLC and Sage Group go up and down completely randomly.
Pair Corralation between Informa PLC and Sage Group
Assuming the 90 days horizon Informa PLC is expected to generate 71.72 times less return on investment than Sage Group. But when comparing it to its historical volatility, Informa PLC ADR is 1.75 times less risky than Sage Group. It trades about 0.01 of its potential returns per unit of risk. Sage Group PLC is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 5,266 in Sage Group PLC on August 30, 2024 and sell it today you would earn a total of 1,351 from holding Sage Group PLC or generate 25.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Informa PLC ADR vs. Sage Group PLC
Performance |
| Timeline |
| Informa PLC ADR |
| Sage Group PLC |
Informa PLC and Sage Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Informa PLC and Sage Group
The main advantage of trading using opposite Informa PLC and Sage Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Informa PLC position performs unexpectedly, Sage Group 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 Sage Group will offset losses from the drop in Sage Group's long position.| Informa PLC vs. Legible | Informa PLC vs. FP Newspapers | Informa PLC vs. RCS MediaGroup SpA | Informa PLC vs. Scholastic |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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