Correlation Between Skanska AB and Travis Perkins
Can any of the company-specific risk be diversified away by investing in both Skanska AB and Travis Perkins 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 Skanska AB and Travis Perkins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skanska AB and Travis Perkins PLC, you can compare the effects of market volatilities on Skanska AB and Travis Perkins 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 Skanska AB with a short position of Travis Perkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skanska AB and Travis Perkins.
Diversification Opportunities for Skanska AB and Travis Perkins
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Skanska and Travis is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Skanska AB and Travis Perkins PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travis Perkins PLC and Skanska AB 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 Skanska AB are associated (or correlated) with Travis Perkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travis Perkins PLC has no effect on the direction of Skanska AB i.e., Skanska AB and Travis Perkins go up and down completely randomly.
Pair Corralation between Skanska AB and Travis Perkins
Assuming the 90 days horizon Skanska AB is expected to generate 1.36 times more return on investment than Travis Perkins. However, Skanska AB is 1.36 times more volatile than Travis Perkins PLC. It trades about 0.06 of its potential returns per unit of risk. Travis Perkins PLC is currently generating about 0.01 per unit of risk. If you would invest 1,384 in Skanska AB on September 12, 2024 and sell it today you would earn a total of 686.00 from holding Skanska AB or generate 49.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.35% |
| Values | Daily Returns |
Skanska AB vs. Travis Perkins PLC
Performance |
| Timeline |
| Skanska AB |
| Travis Perkins PLC |
Skanska AB and Travis Perkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skanska AB and Travis Perkins
The main advantage of trading using opposite Skanska AB and Travis Perkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skanska AB position performs unexpectedly, Travis Perkins 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 Travis Perkins will offset losses from the drop in Travis Perkins' long position.The idea behind Skanska AB and Travis Perkins PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Travis Perkins vs. Atlas Engineered Products | Travis Perkins vs. Antelope Enterprise Holdings | Travis Perkins vs. Intelligent Living Application | Travis Perkins vs. Armstrong World Industries |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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