Correlation Between Shinhan Financial and Whitbread Plc
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial 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 Shinhan Financial and Whitbread Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan Financial Group and Whitbread plc, you can compare the effects of market volatilities on Shinhan Financial 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 Shinhan Financial with a short position of Whitbread Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Whitbread Plc.
Diversification Opportunities for Shinhan Financial and Whitbread Plc
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and Whitbread is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Whitbread plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread plc and Shinhan Financial 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 Shinhan Financial Group 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 Shinhan Financial i.e., Shinhan Financial and Whitbread Plc go up and down completely randomly.
Pair Corralation between Shinhan Financial and Whitbread Plc
Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 1.54 times more return on investment than Whitbread Plc. However, Shinhan Financial is 1.54 times more volatile than Whitbread plc. It trades about 0.1 of its potential returns per unit of risk. Whitbread plc is currently generating about -0.23 per unit of risk. If you would invest 3,373 in Shinhan Financial Group on October 20, 2024 and sell it today you would earn a total of 81.00 from holding Shinhan Financial Group or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Whitbread plc
Performance |
| Timeline |
| Shinhan Financial |
| Whitbread plc |
Shinhan Financial and Whitbread Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Whitbread Plc
The main advantage of trading using opposite Shinhan Financial and Whitbread Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial 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.| Shinhan Financial vs. Community West Bancshares | Shinhan Financial vs. First Financial Northwest | Shinhan Financial vs. Ponce Financial Group | Shinhan Financial vs. Finwise Bancorp |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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