Correlation Between Supermarket Income and Centrica PLC
Can any of the company-specific risk be diversified away by investing in both Supermarket Income and Centrica 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 Supermarket Income and Centrica PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supermarket Income REIT and Centrica PLC, you can compare the effects of market volatilities on Supermarket Income and Centrica 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 Supermarket Income with a short position of Centrica PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and Centrica PLC.
Diversification Opportunities for Supermarket Income and Centrica PLC
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Supermarket and Centrica is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT and Centrica PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrica PLC and Supermarket Income 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 Supermarket Income REIT are associated (or correlated) with Centrica PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrica PLC has no effect on the direction of Supermarket Income i.e., Supermarket Income and Centrica PLC go up and down completely randomly.
Pair Corralation between Supermarket Income and Centrica PLC
Assuming the 90 days trading horizon Supermarket Income REIT is expected to under-perform the Centrica PLC. In addition to that, Supermarket Income is 1.03 times more volatile than Centrica PLC. It trades about -0.02 of its total potential returns per unit of risk. Centrica PLC is currently generating about 0.05 per unit of volatility. If you would invest 9,123 in Centrica PLC on September 13, 2024 and sell it today you would earn a total of 3,892 from holding Centrica PLC or generate 42.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Supermarket Income REIT vs. Centrica PLC
Performance |
| Timeline |
| Supermarket Income REIT |
| Centrica PLC |
Supermarket Income and Centrica PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supermarket Income and Centrica PLC
The main advantage of trading using opposite Supermarket Income and Centrica PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supermarket Income position performs unexpectedly, Centrica 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 Centrica PLC will offset losses from the drop in Centrica PLC's long position.| Supermarket Income vs. Derwent London PLC | Supermarket Income vs. Hammerson PLC | Supermarket Income vs. Workspace Group PLC | Supermarket Income vs. DS Smith 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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