Correlation Between Sage Group and Mitie Group
Can any of the company-specific risk be diversified away by investing in both Sage Group and Mitie Group 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 Mitie Group 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 Mitie Group PLC, you can compare the effects of market volatilities on Sage Group and Mitie Group 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 Mitie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Group and Mitie Group.
Diversification Opportunities for Sage Group and Mitie Group
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sage and Mitie is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sage Group PLC and Mitie Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitie Group 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 Mitie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitie Group PLC has no effect on the direction of Sage Group i.e., Sage Group and Mitie Group go up and down completely randomly.
Pair Corralation between Sage Group and Mitie Group
Assuming the 90 days trading horizon Sage Group PLC is expected to generate 1.21 times more return on investment than Mitie Group. However, Sage Group is 1.21 times more volatile than Mitie Group PLC. It trades about 0.08 of its potential returns per unit of risk. Mitie Group PLC is currently generating about -0.01 per unit of risk. If you would invest 101,392 in Sage Group PLC on December 25, 2024 and sell it today you would earn a total of 18,658 from holding Sage Group PLC or generate 18.4% 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. Mitie Group PLC
Performance |
| Timeline |
| Sage Group PLC |
| Mitie Group PLC |
Sage Group and Mitie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Group and Mitie Group
The main advantage of trading using opposite Sage Group and Mitie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Group position performs unexpectedly, Mitie Group 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 Mitie Group will offset losses from the drop in Mitie Group's long position.| Sage Group vs. Dalata Hotel Group | Sage Group vs. Aptitude Software Group | Sage Group vs. Medical Properties Trust | Sage Group vs. JD Sports Fashion |
| Mitie Group vs. Vienna Insurance Group | Mitie Group vs. Bigblu Broadband PLC | Mitie Group vs. Gamma Communications PLC | Mitie Group vs. Direct Line Insurance |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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