Correlation Between LEGAL GENERAL and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both LEGAL GENERAL 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 LEGAL GENERAL and Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEGAL GENERAL and Fevertree Drinks PLC, you can compare the effects of market volatilities on LEGAL GENERAL 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 LEGAL GENERAL with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEGAL GENERAL and Fevertree Drinks.
Diversification Opportunities for LEGAL GENERAL and Fevertree Drinks
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LEGAL and Fevertree is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding LEGAL GENERAL 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 LEGAL GENERAL 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 LEGAL GENERAL 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 LEGAL GENERAL i.e., LEGAL GENERAL and Fevertree Drinks go up and down completely randomly.
Pair Corralation between LEGAL GENERAL and Fevertree Drinks
Assuming the 90 days trading horizon LEGAL GENERAL is expected to generate 0.77 times more return on investment than Fevertree Drinks. However, LEGAL GENERAL is 1.29 times less risky than Fevertree Drinks. It trades about -0.19 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about -0.37 per unit of risk. If you would invest 283.00 in LEGAL GENERAL on October 12, 2024 and sell it today you would lose (14.00) from holding LEGAL GENERAL or give up 4.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LEGAL GENERAL vs. Fevertree Drinks PLC
Performance |
| Timeline |
| LEGAL GENERAL |
| Fevertree Drinks PLC |
LEGAL GENERAL and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEGAL GENERAL and Fevertree Drinks
The main advantage of trading using opposite LEGAL GENERAL and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEGAL GENERAL 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.| LEGAL GENERAL vs. Fevertree Drinks PLC | LEGAL GENERAL vs. China Eastern Airlines | LEGAL GENERAL vs. Thai Beverage Public | LEGAL GENERAL vs. ELMOS SEMICONDUCTOR |
| Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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