Correlation Between Mitie Group and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Mitie Group and DFS Furniture 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 Mitie Group and DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitie Group PLC and DFS Furniture PLC, you can compare the effects of market volatilities on Mitie Group and DFS Furniture 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 Mitie Group with a short position of DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitie Group and DFS Furniture.
Diversification Opportunities for Mitie Group and DFS Furniture
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mitie and DFS is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Mitie Group PLC and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC and Mitie Group 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 Mitie Group PLC are associated (or correlated) with DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Mitie Group i.e., Mitie Group and DFS Furniture go up and down completely randomly.
Pair Corralation between Mitie Group and DFS Furniture
Assuming the 90 days trading horizon Mitie Group PLC is expected to under-perform the DFS Furniture. But the stock apears to be less risky and, when comparing its historical volatility, Mitie Group PLC is 1.39 times less risky than DFS Furniture. The stock trades about -0.01 of its potential returns per unit of risk. The DFS Furniture PLC is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 12,980 in DFS Furniture PLC on September 12, 2024 and sell it today you would earn a total of 1,400 from holding DFS Furniture PLC or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitie Group PLC vs. DFS Furniture PLC
Performance |
| Timeline |
| Mitie Group PLC |
| DFS Furniture PLC |
Mitie Group and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitie Group and DFS Furniture
The main advantage of trading using opposite Mitie Group and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitie Group position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Mitie Group vs. United Utilities Group | Mitie Group vs. Ecclesiastical Insurance Office | Mitie Group vs. Zurich Insurance Group | Mitie Group vs. Roebuck Food Group |
| DFS Furniture vs. Livermore Investments Group | DFS Furniture vs. Premier Foods PLC | DFS Furniture vs. Aurora Investment Trust | DFS Furniture vs. Various Eateries PLC |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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