Correlation Between S A P and Whitbread Plc
Can any of the company-specific risk be diversified away by investing in both S A P 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 S A P and Whitbread Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE ADR and Whitbread plc, you can compare the effects of market volatilities on S A P 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 S A P with a short position of Whitbread Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Whitbread Plc.
Diversification Opportunities for S A P and Whitbread Plc
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SAP and Whitbread is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE ADR and Whitbread plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread plc and S A P 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 SAP SE ADR 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 S A P i.e., S A P and Whitbread Plc go up and down completely randomly.
Pair Corralation between S A P and Whitbread Plc
Considering the 90-day investment horizon SAP SE ADR is expected to generate 1.62 times more return on investment than Whitbread Plc. However, S A P is 1.62 times more volatile than Whitbread plc. It trades about 0.27 of its potential returns per unit of risk. Whitbread plc is currently generating about -0.23 per unit of risk. If you would invest 24,569 in SAP SE ADR on October 20, 2024 and sell it today you would earn a total of 1,714 from holding SAP SE ADR or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
SAP SE ADR vs. Whitbread plc
Performance |
| Timeline |
| SAP SE ADR |
| Whitbread plc |
S A P and Whitbread Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Whitbread Plc
The main advantage of trading using opposite S A P and Whitbread Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P 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.| S A P vs. Tyler Technologies | S A P vs. Roper Technologies, | S A P vs. Cadence Design Systems | S A P vs. PTC Inc |
| Whitbread Plc vs. National CineMedia | Whitbread Plc vs. Here Media | Whitbread Plc vs. Ubisoft Entertainment | Whitbread Plc vs. Zhihu Inc ADR |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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