Correlation Between LBG Media and Playtech Plc
Can any of the company-specific risk be diversified away by investing in both LBG Media and Playtech 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 LBG Media and Playtech Plc 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 Playtech Plc, you can compare the effects of market volatilities on LBG Media and Playtech 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 LBG Media with a short position of Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBG Media and Playtech Plc.
Diversification Opportunities for LBG Media and Playtech Plc
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between LBG and Playtech is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding LBG Media PLC and Playtech Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech 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 Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech Plc has no effect on the direction of LBG Media i.e., LBG Media and Playtech Plc go up and down completely randomly.
Pair Corralation between LBG Media and Playtech Plc
Assuming the 90 days trading horizon LBG Media PLC is expected to generate 3.13 times more return on investment than Playtech Plc. However, LBG Media is 3.13 times more volatile than Playtech Plc. It trades about 0.15 of its potential returns per unit of risk. Playtech Plc is currently generating about -0.24 per unit of risk. If you would invest 11,800 in LBG Media PLC on October 10, 2024 and sell it today you would earn a total of 900.00 from holding LBG Media PLC or generate 7.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LBG Media PLC vs. Playtech Plc
Performance |
| Timeline |
| LBG Media PLC |
| Playtech Plc |
LBG Media and Playtech Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LBG Media and Playtech Plc
The main advantage of trading using opposite LBG Media and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBG Media position performs unexpectedly, Playtech 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 Playtech Plc will offset losses from the drop in Playtech Plc's long position.| LBG Media vs. SupplyMe Capital PLC | LBG Media vs. SM Energy Co | LBG Media vs. FuelCell Energy | LBG Media vs. Grand Vision Media |
| Playtech Plc vs. Beeks Trading | Playtech Plc vs. Dentsply Sirona | Playtech Plc vs. Spirent Communications plc | Playtech Plc vs. Lindsell Train 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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