Correlation Between RELX PLC and Relx PLC
Can any of the company-specific risk be diversified away by investing in both RELX PLC and Relx 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 RELX PLC and Relx PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RELX PLC and Relx PLC ADR, you can compare the effects of market volatilities on RELX PLC and Relx 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 RELX PLC with a short position of Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of RELX PLC and Relx PLC.
Diversification Opportunities for RELX PLC and Relx PLC
Very weak diversification
The 3 months correlation between RELX and Relx is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding RELX PLC and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR and RELX 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 RELX PLC are associated (or correlated) with Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of RELX PLC i.e., RELX PLC and Relx PLC go up and down completely randomly.
Pair Corralation between RELX PLC and Relx PLC
Assuming the 90 days trading horizon RELX PLC is expected to generate 0.98 times more return on investment than Relx PLC. However, RELX PLC is 1.02 times less risky than Relx PLC. It trades about 0.38 of its potential returns per unit of risk. Relx PLC ADR is currently generating about 0.36 per unit of risk. If you would invest 4,384 in RELX PLC on November 6, 2024 and sell it today you would earn a total of 416.00 from holding RELX PLC or generate 9.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
RELX PLC vs. Relx PLC ADR
Performance |
| Timeline |
| RELX PLC |
| Relx PLC ADR |
RELX PLC and Relx PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RELX PLC and Relx PLC
The main advantage of trading using opposite RELX PLC and Relx PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RELX PLC position performs unexpectedly, Relx 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 Relx PLC will offset losses from the drop in Relx PLC's long position.| RELX PLC vs. Aristocrat Leisure Limited | RELX PLC vs. International Consolidated Airlines | RELX PLC vs. Southwest Airlines Co | RELX PLC vs. PLAY2CHILL SA ZY |
| Relx PLC vs. TRADEGATE | Relx PLC vs. Coffee Holding Co | Relx PLC vs. Darden Restaurants | Relx PLC vs. SENECA FOODS A |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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