Correlation Between Johnson Matthey and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Johnson Matthey and DFS Furniture 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 Johnson Matthey and DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Matthey PLC and DFS Furniture PLC, you can compare the effects of market volatilities on Johnson Matthey and DFS Furniture 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 Johnson Matthey with a short position of DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Matthey and DFS Furniture.
Diversification Opportunities for Johnson Matthey and DFS Furniture
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Johnson and DFS is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Matthey PLC and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC and Johnson Matthey 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 Johnson Matthey PLC are associated (or correlated) with DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Johnson Matthey i.e., Johnson Matthey and DFS Furniture go up and down completely randomly.
Pair Corralation between Johnson Matthey and DFS Furniture
Assuming the 90 days trading horizon Johnson Matthey PLC is expected to under-perform the DFS Furniture. In addition to that, Johnson Matthey is 1.59 times more volatile than DFS Furniture PLC. It trades about -0.15 of its total potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.1 per unit of volatility. If you would invest 13,900 in DFS Furniture PLC on September 25, 2024 and sell it today you would earn a total of 500.00 from holding DFS Furniture PLC or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Matthey PLC vs. DFS Furniture PLC
Performance |
| Timeline |
| Johnson Matthey PLC |
| DFS Furniture PLC |
Johnson Matthey and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Matthey and DFS Furniture
The main advantage of trading using opposite Johnson Matthey and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Matthey position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Johnson Matthey vs. Givaudan SA | Johnson Matthey vs. Antofagasta PLC | Johnson Matthey vs. Ferrexpo PLC | Johnson Matthey vs. Atalaya Mining |
| DFS Furniture vs. Chocoladefabriken Lindt Spruengli | DFS Furniture vs. Rockwood Realisation PLC | DFS Furniture vs. Toyota Motor Corp | DFS Furniture vs. Johnson Matthey 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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