Correlation Between Reckitt Benckiser and Derwent London
Can any of the company-specific risk be diversified away by investing in both Reckitt Benckiser and Derwent London 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 Reckitt Benckiser and Derwent London into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reckitt Benckiser Group and Derwent London PLC, you can compare the effects of market volatilities on Reckitt Benckiser and Derwent London 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 Reckitt Benckiser with a short position of Derwent London. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reckitt Benckiser and Derwent London.
Diversification Opportunities for Reckitt Benckiser and Derwent London
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Reckitt and Derwent is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Reckitt Benckiser Group and Derwent London PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derwent London PLC and Reckitt Benckiser 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 Reckitt Benckiser Group are associated (or correlated) with Derwent London. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derwent London PLC has no effect on the direction of Reckitt Benckiser i.e., Reckitt Benckiser and Derwent London go up and down completely randomly.
Pair Corralation between Reckitt Benckiser and Derwent London
Assuming the 90 days trading horizon Reckitt Benckiser Group is expected to generate 0.82 times more return on investment than Derwent London. However, Reckitt Benckiser Group is 1.21 times less risky than Derwent London. It trades about 0.05 of its potential returns per unit of risk. Derwent London PLC is currently generating about -0.15 per unit of risk. If you would invest 478,900 in Reckitt Benckiser Group on September 12, 2024 and sell it today you would earn a total of 4,600 from holding Reckitt Benckiser Group or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Reckitt Benckiser Group vs. Derwent London PLC
Performance |
| Timeline |
| Reckitt Benckiser |
| Derwent London PLC |
Reckitt Benckiser and Derwent London Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reckitt Benckiser and Derwent London
The main advantage of trading using opposite Reckitt Benckiser and Derwent London positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reckitt Benckiser position performs unexpectedly, Derwent London 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 Derwent London will offset losses from the drop in Derwent London's long position.| Reckitt Benckiser vs. Fortune Brands Home | Reckitt Benckiser vs. Neometals | Reckitt Benckiser vs. McEwen Mining | Reckitt Benckiser vs. Zurich Insurance Group |
| Derwent London vs. Symphony Environmental Technologies | Derwent London vs. Allianz Technology Trust | Derwent London vs. Albion Technology General | Derwent London vs. Addtech |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |