Correlation Between Pets At and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both Pets At and Cairn Homes 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 Pets At and Cairn Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pets at Home and Cairn Homes PLC, you can compare the effects of market volatilities on Pets At and Cairn Homes 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 Pets At with a short position of Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pets At and Cairn Homes.
Diversification Opportunities for Pets At and Cairn Homes
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pets and Cairn is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pets at Home and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC and Pets At 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 Pets at Home are associated (or correlated) with Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Pets At i.e., Pets At and Cairn Homes go up and down completely randomly.
Pair Corralation between Pets At and Cairn Homes
Assuming the 90 days trading horizon Pets at Home is expected to under-perform the Cairn Homes. In addition to that, Pets At is 1.39 times more volatile than Cairn Homes PLC. It trades about -0.15 of its total potential returns per unit of risk. Cairn Homes PLC is currently generating about 0.06 per unit of volatility. If you would invest 15,978 in Cairn Homes PLC on August 30, 2024 and sell it today you would earn a total of 1,102 from holding Cairn Homes PLC or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pets at Home vs. Cairn Homes PLC
Performance |
| Timeline |
| Pets at Home |
| Cairn Homes PLC |
Pets At and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pets At and Cairn Homes
The main advantage of trading using opposite Pets At and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pets At position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| Pets At vs. Vitec Software Group | Pets At vs. Air Products Chemicals | Pets At vs. Take Two Interactive Software | Pets At vs. Veolia Environnement VE |
| Cairn Homes vs. Alfa Financial Software | Cairn Homes vs. Check Point Software | Cairn Homes vs. GreenX Metals | Cairn Homes vs. Wheaton Precious Metals |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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