Correlation Between LBG Media and Shell Plc
Can any of the company-specific risk be diversified away by investing in both LBG Media and Shell 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 Shell 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 Shell plc, you can compare the effects of market volatilities on LBG Media and Shell 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 Shell Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBG Media and Shell Plc.
Diversification Opportunities for LBG Media and Shell Plc
Very good diversification
The 3 months correlation between LBG and Shell is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding LBG Media PLC and Shell plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell 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 Shell Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell plc has no effect on the direction of LBG Media i.e., LBG Media and Shell Plc go up and down completely randomly.
Pair Corralation between LBG Media and Shell Plc
Assuming the 90 days trading horizon LBG Media PLC is expected to generate 1.96 times more return on investment than Shell Plc. However, LBG Media is 1.96 times more volatile than Shell plc. It trades about 0.02 of its potential returns per unit of risk. Shell plc is currently generating about 0.01 per unit of risk. If you would invest 11,000 in LBG Media PLC on September 3, 2024 and sell it today you would earn a total of 1,500 from holding LBG Media PLC or generate 13.64% 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. Shell plc
Performance |
| Timeline |
| LBG Media PLC |
| Shell plc |
LBG Media and Shell Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LBG Media and Shell Plc
The main advantage of trading using opposite LBG Media and Shell Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBG Media position performs unexpectedly, Shell 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 Shell Plc will offset losses from the drop in Shell Plc's long position.| LBG Media vs. Intuitive Investments Group | LBG Media vs. European Metals Holdings | LBG Media vs. Athelney Trust plc | LBG Media vs. Invesco Health Care |
| Shell Plc vs. Flowtech Fluidpower plc | Shell Plc vs. Fidelity National Information | Shell Plc vs. Gaztransport et Technigaz | Shell Plc vs. Teradata Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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