Correlation Between Sherborne Investors and Ashtead Group
Can any of the company-specific risk be diversified away by investing in both Sherborne Investors and Ashtead 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 Sherborne Investors and Ashtead Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sherborne Investors Guernsey and Ashtead Group PLC, you can compare the effects of market volatilities on Sherborne Investors and Ashtead 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 Sherborne Investors with a short position of Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherborne Investors and Ashtead Group.
Diversification Opportunities for Sherborne Investors and Ashtead Group
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sherborne and Ashtead is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sherborne Investors Guernsey and Ashtead Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group PLC and Sherborne Investors 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 Sherborne Investors Guernsey are associated (or correlated) with Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group PLC has no effect on the direction of Sherborne Investors i.e., Sherborne Investors and Ashtead Group go up and down completely randomly.
Pair Corralation between Sherborne Investors and Ashtead Group
Assuming the 90 days trading horizon Sherborne Investors is expected to generate 2.44 times less return on investment than Ashtead Group. But when comparing it to its historical volatility, Sherborne Investors Guernsey is 1.54 times less risky than Ashtead Group. It trades about 0.14 of its potential returns per unit of risk. Ashtead Group PLC is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 584,200 in Ashtead Group PLC on September 2, 2024 and sell it today you would earn a total of 44,800 from holding Ashtead Group PLC or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sherborne Investors Guernsey vs. Ashtead Group PLC
Performance |
| Timeline |
| Sherborne Investors |
| Ashtead Group PLC |
Sherborne Investors and Ashtead Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sherborne Investors and Ashtead Group
The main advantage of trading using opposite Sherborne Investors and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherborne Investors position performs unexpectedly, Ashtead 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 Ashtead Group will offset losses from the drop in Ashtead Group's long position.| Sherborne Investors vs. Cornish Metals | Sherborne Investors vs. GreenX Metals | Sherborne Investors vs. Neometals | Sherborne Investors vs. Greenroc Mining PLC |
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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 Stocks Directory module to find actively traded stocks across global markets.
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