Correlation Between Oakley Capital and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Oakley Capital 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 Oakley Capital and Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakley Capital Investments and Fevertree Drinks Plc, you can compare the effects of market volatilities on Oakley Capital 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 Oakley Capital with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakley Capital and Fevertree Drinks.
Diversification Opportunities for Oakley Capital and Fevertree Drinks
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oakley and Fevertree is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Oakley Capital Investments 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 Oakley Capital 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 Oakley Capital Investments 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 Oakley Capital i.e., Oakley Capital and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Oakley Capital and Fevertree Drinks
Assuming the 90 days trading horizon Oakley Capital Investments is expected to generate 0.42 times more return on investment than Fevertree Drinks. However, Oakley Capital Investments is 2.39 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 -0.27 per unit of risk. If you would invest 51,000 in Oakley Capital Investments on August 30, 2024 and sell it today you would lose (2,700) from holding Oakley Capital Investments or give up 5.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oakley Capital Investments vs. Fevertree Drinks Plc
Performance |
| Timeline |
| Oakley Capital Inves |
| Fevertree Drinks Plc |
Oakley Capital and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oakley Capital and Fevertree Drinks
The main advantage of trading using opposite Oakley Capital and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakley Capital 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.| Oakley Capital vs. Toyota Motor Corp | Oakley Capital vs. Neometals | Oakley Capital vs. Coor Service Management | Oakley Capital vs. Jupiter Fund Management |
| Fevertree Drinks vs. Samsung Electronics Co | Fevertree Drinks vs. Samsung Electronics Co | Fevertree Drinks vs. Toyota Motor Corp | Fevertree Drinks vs. MOL Hungarian Oil |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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