Correlation Between Mitie Group and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Mitie Group 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 Mitie Group and Fevertree Drinks 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 Fevertree Drinks Plc, you can compare the effects of market volatilities on Mitie Group 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 Mitie Group with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitie Group and Fevertree Drinks.
Diversification Opportunities for Mitie Group and Fevertree Drinks
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mitie and Fevertree is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mitie Group PLC 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 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 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 Mitie Group i.e., Mitie Group and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Mitie Group and Fevertree Drinks
Assuming the 90 days trading horizon Mitie Group PLC is expected to under-perform the Fevertree Drinks. In addition to that, Mitie Group is 1.21 times more volatile than Fevertree Drinks Plc. It trades about -0.05 of its total potential returns per unit of risk. Fevertree Drinks Plc is currently generating about 0.06 per unit of volatility. If you would invest 70,600 in Fevertree Drinks Plc on September 13, 2024 and sell it today you would earn a total of 1,100 from holding Fevertree Drinks Plc or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitie Group PLC vs. Fevertree Drinks Plc
Performance |
| Timeline |
| Mitie Group PLC |
| Fevertree Drinks Plc |
Mitie Group and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitie Group and Fevertree Drinks
The main advantage of trading using opposite Mitie Group and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitie Group 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.| Mitie Group vs. Centaur Media | Mitie Group vs. AcadeMedia AB | Mitie Group vs. Prosiebensat 1 Media | Mitie Group vs. Catena Media PLC |
| Fevertree Drinks vs. Roper Technologies | Fevertree Drinks vs. Sunny Optical Technology | Fevertree Drinks vs. Accsys Technologies PLC | Fevertree Drinks vs. Metals Exploration 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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