Correlation Between Kerry and Glanbia PLC
Can any of the company-specific risk be diversified away by investing in both Kerry and Glanbia 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 Kerry and Glanbia PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kerry Group and Glanbia PLC, you can compare the effects of market volatilities on Kerry and Glanbia 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 Kerry with a short position of Glanbia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerry and Glanbia PLC.
Diversification Opportunities for Kerry and Glanbia PLC
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kerry and Glanbia is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group and Glanbia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glanbia PLC and Kerry 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 Kerry Group are associated (or correlated) with Glanbia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glanbia PLC has no effect on the direction of Kerry i.e., Kerry and Glanbia PLC go up and down completely randomly.
Pair Corralation between Kerry and Glanbia PLC
Assuming the 90 days trading horizon Kerry Group is expected to generate 0.8 times more return on investment than Glanbia PLC. However, Kerry Group is 1.25 times less risky than Glanbia PLC. It trades about 0.05 of its potential returns per unit of risk. Glanbia PLC is currently generating about -0.01 per unit of risk. If you would invest 7,470 in Kerry Group on August 24, 2024 and sell it today you would earn a total of 1,125 from holding Kerry Group or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kerry Group vs. Glanbia PLC
Performance |
| Timeline |
| Kerry Group |
| Glanbia PLC |
Kerry and Glanbia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kerry and Glanbia PLC
The main advantage of trading using opposite Kerry and Glanbia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry position performs unexpectedly, Glanbia 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 Glanbia PLC will offset losses from the drop in Glanbia PLC's long position.The idea behind Kerry Group and Glanbia PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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