Correlation Between Sage Group and Cornish Metals
Can any of the company-specific risk be diversified away by investing in both Sage Group and Cornish Metals 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 Sage Group and Cornish Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sage Group PLC and Cornish Metals, you can compare the effects of market volatilities on Sage Group and Cornish Metals 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 Sage Group with a short position of Cornish Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Group and Cornish Metals.
Diversification Opportunities for Sage Group and Cornish Metals
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sage and Cornish is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sage Group PLC and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals and Sage Group 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 Sage Group PLC are associated (or correlated) with Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of Sage Group i.e., Sage Group and Cornish Metals go up and down completely randomly.
Pair Corralation between Sage Group and Cornish Metals
Assuming the 90 days trading horizon Sage Group PLC is expected to generate 0.41 times more return on investment than Cornish Metals. However, Sage Group PLC is 2.45 times less risky than Cornish Metals. It trades about 0.08 of its potential returns per unit of risk. Cornish Metals is currently generating about -0.02 per unit of risk. If you would invest 74,148 in Sage Group PLC on October 11, 2024 and sell it today you would earn a total of 56,552 from holding Sage Group PLC or generate 76.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sage Group PLC vs. Cornish Metals
Performance |
| Timeline |
| Sage Group PLC |
| Cornish Metals |
Sage Group and Cornish Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Group and Cornish Metals
The main advantage of trading using opposite Sage Group and Cornish Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Group position performs unexpectedly, Cornish Metals 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 Cornish Metals will offset losses from the drop in Cornish Metals' long position.| Sage Group vs. Cornish Metals | Sage Group vs. Zoom Video Communications | Sage Group vs. Naked Wines plc | Sage Group vs. Bisichi Mining PLC |
| Cornish Metals vs. Travel Leisure Co | Cornish Metals vs. Trellus Health plc | Cornish Metals vs. Target Healthcare REIT | Cornish Metals vs. Spire Healthcare Group |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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