Correlation Between National Grid and G8 EDUCATION
Can any of the company-specific risk be diversified away by investing in both National Grid and G8 EDUCATION 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 National Grid and G8 EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Grid plc and G8 EDUCATION, you can compare the effects of market volatilities on National Grid and G8 EDUCATION 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 National Grid with a short position of G8 EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Grid and G8 EDUCATION.
Diversification Opportunities for National Grid and G8 EDUCATION
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and 3EAG is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding National Grid plc and G8 EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G8 EDUCATION and National Grid 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 National Grid plc are associated (or correlated) with G8 EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G8 EDUCATION has no effect on the direction of National Grid i.e., National Grid and G8 EDUCATION go up and down completely randomly.
Pair Corralation between National Grid and G8 EDUCATION
Assuming the 90 days trading horizon National Grid is expected to generate 1.01 times less return on investment than G8 EDUCATION. In addition to that, National Grid is 1.12 times more volatile than G8 EDUCATION. It trades about 0.09 of its total potential returns per unit of risk. G8 EDUCATION is currently generating about 0.1 per unit of volatility. If you would invest 79.00 in G8 EDUCATION on September 5, 2024 and sell it today you would earn a total of 3.00 from holding G8 EDUCATION or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
National Grid plc vs. G8 EDUCATION
Performance |
| Timeline |
| National Grid plc |
| G8 EDUCATION |
National Grid and G8 EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Grid and G8 EDUCATION
The main advantage of trading using opposite National Grid and G8 EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Grid position performs unexpectedly, G8 EDUCATION 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 G8 EDUCATION will offset losses from the drop in G8 EDUCATION's long position.| National Grid vs. G8 EDUCATION | National Grid vs. Cal Maine Foods | National Grid vs. United Natural Foods | National Grid vs. EEDUCATION ALBERT AB |
| G8 EDUCATION vs. TOTAL GABON | G8 EDUCATION vs. Walgreens Boots Alliance | G8 EDUCATION vs. Peak Resources Limited |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |