Correlation Between Relx PLC and RELX PLC

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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 ADR and RELX PLC, 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

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Relx and RELX is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Relx PLC ADR and RELX PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELX PLC 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 ADR 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 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 ADR is expected to generate 0.94 times more return on investment than RELX PLC. However, Relx PLC ADR is 1.07 times less risky than RELX PLC. It trades about 0.14 of its potential returns per unit of risk. RELX PLC is currently generating about 0.08 per unit of risk. If you would invest  4,420  in Relx PLC ADR on November 6, 2024 and sell it today you would earn a total of  420.00  from holding Relx PLC ADR or generate 9.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy98.33%
ValuesDaily Returns

Relx PLC ADR  vs.  RELX PLC

 Performance 
       Timeline  
Relx PLC ADR 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Relx PLC ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Relx PLC may actually be approaching a critical reversion point that can send shares even higher in March 2025.
RELX PLC 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in RELX PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, RELX PLC may actually be approaching a critical reversion point that can send shares even higher in March 2025.

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.
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The idea behind Relx PLC ADR and RELX PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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