Correlation Between IG Group and Rightmove PLC
Can any of the company-specific risk be diversified away by investing in both IG Group and Rightmove 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 IG Group and Rightmove PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IG Group Holdings and Rightmove PLC, you can compare the effects of market volatilities on IG Group and Rightmove 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 IG Group with a short position of Rightmove PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of IG Group and Rightmove PLC.
Diversification Opportunities for IG Group and Rightmove PLC
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between IGG and Rightmove is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding IG Group Holdings and Rightmove PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rightmove PLC and IG Group 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 IG Group Holdings are associated (or correlated) with Rightmove PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rightmove PLC has no effect on the direction of IG Group i.e., IG Group and Rightmove PLC go up and down completely randomly.
Pair Corralation between IG Group and Rightmove PLC
Assuming the 90 days trading horizon IG Group is expected to generate 1.02 times less return on investment than Rightmove PLC. But when comparing it to its historical volatility, IG Group Holdings is 2.39 times less risky than Rightmove PLC. It trades about 0.13 of its potential returns per unit of risk. Rightmove PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 55,473 in Rightmove PLC on September 3, 2024 and sell it today you would earn a total of 9,407 from holding Rightmove PLC or generate 16.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IG Group Holdings vs. Rightmove PLC
Performance |
| Timeline |
| IG Group Holdings |
| Rightmove PLC |
IG Group and Rightmove PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IG Group and Rightmove PLC
The main advantage of trading using opposite IG Group and Rightmove PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IG Group position performs unexpectedly, Rightmove 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 Rightmove PLC will offset losses from the drop in Rightmove PLC's long position.| IG Group vs. Iron Mountain | IG Group vs. Telecom Italia SpA | IG Group vs. Aeorema Communications Plc | IG Group vs. Axfood AB |
| Rightmove PLC vs. Cars Inc | Rightmove PLC vs. Litigation Capital Management | Rightmove PLC vs. Grieg Seafood | Rightmove PLC vs. Austevoll Seafood ASA |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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