Correlation Between LBG Media and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both LBG Media and Fevertree Drinks 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 LBG Media and Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LBG Media PLC and Fevertree Drinks Plc, you can compare the effects of market volatilities on LBG Media and Fevertree Drinks 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 LBG Media with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBG Media and Fevertree Drinks.
Diversification Opportunities for LBG Media and Fevertree Drinks
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between LBG and Fevertree is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding LBG Media PLC and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks Plc and LBG Media 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 LBG Media PLC are associated (or correlated) with Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of LBG Media i.e., LBG Media and Fevertree Drinks go up and down completely randomly.
Pair Corralation between LBG Media and Fevertree Drinks
Assuming the 90 days trading horizon LBG Media PLC is expected to generate 0.81 times more return on investment than Fevertree Drinks. However, LBG Media PLC is 1.24 times less risky than Fevertree Drinks. It trades about -0.01 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.04 per unit of risk. If you would invest 12,750 in LBG Media PLC on November 7, 2024 and sell it today you would lose (750.00) from holding LBG Media PLC or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LBG Media PLC vs. Fevertree Drinks Plc
Performance |
| Timeline |
| LBG Media PLC |
| Fevertree Drinks Plc |
LBG Media and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LBG Media and Fevertree Drinks
The main advantage of trading using opposite LBG Media and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBG Media position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| LBG Media vs. Playtech Plc | LBG Media vs. International Biotechnology Trust | LBG Media vs. Travel Leisure Co | LBG Media vs. Southwest Airlines Co |
| Fevertree Drinks vs. Fidelity National Information | Fevertree Drinks vs. Electronic Arts | Fevertree Drinks vs. Alliance Data Systems | Fevertree Drinks vs. Nordic Semiconductor 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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