Correlation Between Shell Plc and Sage Group
Can any of the company-specific risk be diversified away by investing in both Shell Plc and Sage 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 Shell Plc and Sage Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shell plc and Sage Group PLC, you can compare the effects of market volatilities on Shell Plc and Sage 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 Shell Plc with a short position of Sage Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shell Plc and Sage Group.
Diversification Opportunities for Shell Plc and Sage Group
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shell and Sage is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Shell plc and Sage Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Group PLC and Shell Plc 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 Shell plc are associated (or correlated) with Sage Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Group PLC has no effect on the direction of Shell Plc i.e., Shell Plc and Sage Group go up and down completely randomly.
Pair Corralation between Shell Plc and Sage Group
Assuming the 90 days trading horizon Shell plc is expected to generate 1.44 times more return on investment than Sage Group. However, Shell Plc is 1.44 times more volatile than Sage Group PLC. It trades about 0.23 of its potential returns per unit of risk. Sage Group PLC is currently generating about 0.12 per unit of risk. If you would invest 249,250 in Shell plc on October 12, 2024 and sell it today you would earn a total of 12,100 from holding Shell plc or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shell plc vs. Sage Group PLC
Performance |
| Timeline |
| Shell plc |
| Sage Group PLC |
Shell Plc and Sage Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shell Plc and Sage Group
The main advantage of trading using opposite Shell Plc and Sage Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shell Plc position performs unexpectedly, Sage 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 Sage Group will offset losses from the drop in Sage Group's long position.| Shell Plc vs. National Beverage Corp | Shell Plc vs. Molson Coors Beverage | Shell Plc vs. Electronic Arts | Shell Plc vs. Coor Service Management |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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