Correlation Between Pollard Banknote and Keg Royalties
Can any of the company-specific risk be diversified away by investing in both Pollard Banknote and Keg Royalties 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 Pollard Banknote and Keg Royalties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pollard Banknote Limited and The Keg Royalties, you can compare the effects of market volatilities on Pollard Banknote and Keg Royalties 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 Pollard Banknote with a short position of Keg Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pollard Banknote and Keg Royalties.
Diversification Opportunities for Pollard Banknote and Keg Royalties
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pollard and Keg is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pollard Banknote Limited and The Keg Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keg Royalties and Pollard Banknote 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 Pollard Banknote Limited are associated (or correlated) with Keg Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keg Royalties has no effect on the direction of Pollard Banknote i.e., Pollard Banknote and Keg Royalties go up and down completely randomly.
Pair Corralation between Pollard Banknote and Keg Royalties
Assuming the 90 days trading horizon Pollard Banknote Limited is expected to generate 3.62 times more return on investment than Keg Royalties. However, Pollard Banknote is 3.62 times more volatile than The Keg Royalties. It trades about 0.11 of its potential returns per unit of risk. The Keg Royalties is currently generating about -0.3 per unit of risk. If you would invest 2,405 in Pollard Banknote Limited on August 28, 2024 and sell it today you would earn a total of 135.00 from holding Pollard Banknote Limited or generate 5.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pollard Banknote Limited vs. The Keg Royalties
Performance |
| Timeline |
| Pollard Banknote |
| Keg Royalties |
Pollard Banknote and Keg Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pollard Banknote and Keg Royalties
The main advantage of trading using opposite Pollard Banknote and Keg Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pollard Banknote position performs unexpectedly, Keg Royalties 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 Keg Royalties will offset losses from the drop in Keg Royalties' long position.| Pollard Banknote vs. TFI International | Pollard Banknote vs. Baylin Technologies | Pollard Banknote vs. Information Services |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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