Correlation Between Sonic Healthcare and Bunzl Plc
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Bunzl 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 Sonic Healthcare and Bunzl Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Healthcare Ltd and Bunzl plc, you can compare the effects of market volatilities on Sonic Healthcare and Bunzl 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 Sonic Healthcare with a short position of Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Bunzl Plc.
Diversification Opportunities for Sonic Healthcare and Bunzl Plc
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sonic and Bunzl is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare Ltd and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc and Sonic Healthcare 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 Sonic Healthcare Ltd are associated (or correlated) with Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Bunzl Plc go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Bunzl Plc
Assuming the 90 days horizon Sonic Healthcare is expected to generate 7.81 times less return on investment than Bunzl Plc. In addition to that, Sonic Healthcare is 1.44 times more volatile than Bunzl plc. It trades about 0.0 of its total potential returns per unit of risk. Bunzl plc is currently generating about 0.05 per unit of volatility. If you would invest 3,501 in Bunzl plc on August 29, 2024 and sell it today you would earn a total of 970.00 from holding Bunzl plc or generate 27.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Healthcare Ltd vs. Bunzl plc
Performance |
| Timeline |
| Sonic Healthcare |
| Bunzl plc |
Sonic Healthcare and Bunzl Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Bunzl Plc
The main advantage of trading using opposite Sonic Healthcare and Bunzl Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Bunzl 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 Bunzl Plc will offset losses from the drop in Bunzl Plc's long position.| Sonic Healthcare vs. China New Energy | Sonic Healthcare vs. Lonza Group | Sonic Healthcare vs. Charles River Laboratories | Sonic Healthcare vs. Qiagen NV |
| Bunzl Plc vs. Associated British Foods | Bunzl Plc vs. Compass Group PLC | Bunzl Plc vs. Ashtead Gro | Bunzl Plc vs. Kerry Group PLC |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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