Correlation Between Transocean and Whitbread Plc
Can any of the company-specific risk be diversified away by investing in both Transocean and Whitbread 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 Transocean and Whitbread Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transocean and Whitbread plc, you can compare the effects of market volatilities on Transocean and Whitbread 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 Transocean with a short position of Whitbread Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transocean and Whitbread Plc.
Diversification Opportunities for Transocean and Whitbread Plc
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Transocean and Whitbread is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Transocean and Whitbread plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread plc and Transocean 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 Transocean are associated (or correlated) with Whitbread Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitbread plc has no effect on the direction of Transocean i.e., Transocean and Whitbread Plc go up and down completely randomly.
Pair Corralation between Transocean and Whitbread Plc
Considering the 90-day investment horizon Transocean is expected to generate 0.65 times more return on investment than Whitbread Plc. However, Transocean is 1.53 times less risky than Whitbread Plc. It trades about -0.27 of its potential returns per unit of risk. Whitbread plc is currently generating about -0.22 per unit of risk. If you would invest 446.00 in Transocean on September 15, 2024 and sell it today you would lose (60.00) from holding Transocean or give up 13.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transocean vs. Whitbread plc
Performance |
| Timeline |
| Transocean |
| Whitbread plc |
Transocean and Whitbread Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transocean and Whitbread Plc
The main advantage of trading using opposite Transocean and Whitbread Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transocean position performs unexpectedly, Whitbread 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 Whitbread Plc will offset losses from the drop in Whitbread Plc's long position.| Transocean vs. Addus HomeCare | Transocean vs. Herc Holdings | Transocean vs. Hooker Furniture | Transocean vs. Boston Properties |
| Whitbread Plc vs. Western Acquisition Ventures | Whitbread Plc vs. Transocean | Whitbread Plc vs. Rand Capital Corp | Whitbread Plc vs. Awilco Drilling PLC |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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