Correlation Between Reckitt Benckiser and SupplyMe Capital
Can any of the company-specific risk be diversified away by investing in both Reckitt Benckiser and SupplyMe Capital 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 SupplyMe Capital 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 SupplyMe Capital PLC, you can compare the effects of market volatilities on Reckitt Benckiser and SupplyMe Capital 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 SupplyMe Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reckitt Benckiser and SupplyMe Capital.
Diversification Opportunities for Reckitt Benckiser and SupplyMe Capital
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reckitt and SupplyMe is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Reckitt Benckiser Group and SupplyMe Capital PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SupplyMe Capital 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 SupplyMe Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SupplyMe Capital PLC has no effect on the direction of Reckitt Benckiser i.e., Reckitt Benckiser and SupplyMe Capital go up and down completely randomly.
Pair Corralation between Reckitt Benckiser and SupplyMe Capital
Assuming the 90 days trading horizon Reckitt Benckiser Group is expected to generate 0.16 times more return on investment than SupplyMe Capital. However, Reckitt Benckiser Group is 6.29 times less risky than SupplyMe Capital. It trades about 0.01 of its potential returns per unit of risk. SupplyMe Capital PLC is currently generating about -0.02 per unit of risk. If you would invest 535,728 in Reckitt Benckiser Group on November 2, 2024 and sell it today you would lose (2,528) from holding Reckitt Benckiser Group or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reckitt Benckiser Group vs. SupplyMe Capital PLC
Performance |
| Timeline |
| Reckitt Benckiser |
| SupplyMe Capital PLC |
Reckitt Benckiser and SupplyMe Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reckitt Benckiser and SupplyMe Capital
The main advantage of trading using opposite Reckitt Benckiser and SupplyMe Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reckitt Benckiser position performs unexpectedly, SupplyMe Capital 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 SupplyMe Capital will offset losses from the drop in SupplyMe Capital's long position.| Reckitt Benckiser vs. Infrastrutture Wireless Italiane | Reckitt Benckiser vs. Lowland Investment Co | Reckitt Benckiser vs. Smithson Investment Trust | Reckitt Benckiser vs. Ecclesiastical Insurance Office |
| SupplyMe Capital vs. Gamma Communications PLC | SupplyMe Capital vs. Liberty Media Corp | SupplyMe Capital vs. Hollywood Bowl Group | SupplyMe Capital vs. AcadeMedia AB |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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