Correlation Between London Stock and BSF Enterprise
Can any of the company-specific risk be diversified away by investing in both London Stock and BSF Enterprise 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 London Stock and BSF Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Stock Exchange and BSF Enterprise Plc, you can compare the effects of market volatilities on London Stock and BSF Enterprise 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 London Stock with a short position of BSF Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Stock and BSF Enterprise.
Diversification Opportunities for London Stock and BSF Enterprise
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between London and BSF is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding London Stock Exchange and BSF Enterprise Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSF Enterprise Plc and London Stock 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 London Stock Exchange are associated (or correlated) with BSF Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSF Enterprise Plc has no effect on the direction of London Stock i.e., London Stock and BSF Enterprise go up and down completely randomly.
Pair Corralation between London Stock and BSF Enterprise
Assuming the 90 days trading horizon London Stock Exchange is expected to generate 0.19 times more return on investment than BSF Enterprise. However, London Stock Exchange is 5.27 times less risky than BSF Enterprise. It trades about 0.26 of its potential returns per unit of risk. BSF Enterprise Plc is currently generating about -0.19 per unit of risk. If you would invest 1,038,500 in London Stock Exchange on August 24, 2024 and sell it today you would earn a total of 62,500 from holding London Stock Exchange or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
London Stock Exchange vs. BSF Enterprise Plc
Performance |
| Timeline |
| London Stock Exchange |
| BSF Enterprise Plc |
London Stock and BSF Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Stock and BSF Enterprise
The main advantage of trading using opposite London Stock and BSF Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Stock position performs unexpectedly, BSF Enterprise 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 BSF Enterprise will offset losses from the drop in BSF Enterprise's long position.| London Stock vs. Medical Properties Trust | London Stock vs. AMG Advanced Metallurgical | London Stock vs. Kaufman Et Broad | London Stock vs. Broadridge Financial Solutions |
| BSF Enterprise vs. Ross Stores | BSF Enterprise vs. Taiwan Semiconductor Manufacturing | BSF Enterprise vs. St Galler Kantonalbank | BSF Enterprise vs. Cincinnati Financial 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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