Correlation Between Sage Group and Mitchells Butlers
Can any of the company-specific risk be diversified away by investing in both Sage Group and Mitchells Butlers 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 Mitchells Butlers 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 Mitchells Butlers PLC, you can compare the effects of market volatilities on Sage Group and Mitchells Butlers 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 Mitchells Butlers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Group and Mitchells Butlers.
Diversification Opportunities for Sage Group and Mitchells Butlers
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sage and Mitchells is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sage Group PLC and Mitchells Butlers PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitchells Butlers PLC 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 Mitchells Butlers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitchells Butlers PLC has no effect on the direction of Sage Group i.e., Sage Group and Mitchells Butlers go up and down completely randomly.
Pair Corralation between Sage Group and Mitchells Butlers
Assuming the 90 days trading horizon Sage Group PLC is expected to generate 0.36 times more return on investment than Mitchells Butlers. However, Sage Group PLC is 2.75 times less risky than Mitchells Butlers. It trades about 0.34 of its potential returns per unit of risk. Mitchells Butlers PLC is currently generating about -0.15 per unit of risk. If you would invest 126,579 in Sage Group PLC on November 2, 2024 and sell it today you would earn a total of 6,321 from holding Sage Group PLC or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sage Group PLC vs. Mitchells Butlers PLC
Performance |
| Timeline |
| Sage Group PLC |
| Mitchells Butlers PLC |
Sage Group and Mitchells Butlers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Group and Mitchells Butlers
The main advantage of trading using opposite Sage Group and Mitchells Butlers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Group position performs unexpectedly, Mitchells Butlers 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 Mitchells Butlers will offset losses from the drop in Mitchells Butlers' long position.| Sage Group vs. Impax Asset Management | Sage Group vs. Datagroup SE | Sage Group vs. Applied Materials | Sage Group vs. Rosslyn Data Technologies |
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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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