Correlation Between Persimmon PLC and Persimmon Plc
Can any of the company-specific risk be diversified away by investing in both Persimmon PLC and Persimmon Plc 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 Persimmon PLC and Persimmon Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Persimmon PLC and Persimmon Plc, you can compare the effects of market volatilities on Persimmon PLC and Persimmon Plc 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 Persimmon PLC with a short position of Persimmon Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Persimmon PLC and Persimmon Plc.
Diversification Opportunities for Persimmon PLC and Persimmon Plc
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Persimmon and Persimmon is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Persimmon PLC and Persimmon Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Persimmon Plc and Persimmon PLC 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 Persimmon PLC are associated (or correlated) with Persimmon Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Persimmon Plc has no effect on the direction of Persimmon PLC i.e., Persimmon PLC and Persimmon Plc go up and down completely randomly.
Pair Corralation between Persimmon PLC and Persimmon Plc
Assuming the 90 days horizon Persimmon PLC is expected to generate 2.1 times more return on investment than Persimmon Plc. However, Persimmon PLC is 2.1 times more volatile than Persimmon Plc. It trades about 0.02 of its potential returns per unit of risk. Persimmon Plc is currently generating about 0.01 per unit of risk. If you would invest 1,819 in Persimmon PLC on November 2, 2024 and sell it today you would lose (219.00) from holding Persimmon PLC or give up 12.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.43% |
| Values | Daily Returns |
Persimmon PLC vs. Persimmon Plc
Performance |
| Timeline |
| Persimmon PLC |
| Persimmon Plc |
Persimmon PLC and Persimmon Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Persimmon PLC and Persimmon Plc
The main advantage of trading using opposite Persimmon PLC and Persimmon Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Persimmon PLC position performs unexpectedly, Persimmon Plc 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 Persimmon Plc will offset losses from the drop in Persimmon Plc's long position.| Persimmon PLC vs. Taylor Wimpey plc | Persimmon PLC vs. Consorcio ARA S | Persimmon PLC vs. Barratt Developments PLC | Persimmon PLC vs. Cyrela Brazil Realty |
| Persimmon Plc vs. Taylor Wimpey plc | Persimmon Plc vs. Barratt Developments PLC | Persimmon Plc vs. Barratt Developments plc | Persimmon Plc vs. Consorcio ARA S |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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