Correlation Between Travis Perkins and Burnham Holdings
Can any of the company-specific risk be diversified away by investing in both Travis Perkins and Burnham Holdings 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 Travis Perkins and Burnham Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Travis Perkins PLC and Burnham Holdings, you can compare the effects of market volatilities on Travis Perkins and Burnham Holdings 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 Travis Perkins with a short position of Burnham Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travis Perkins and Burnham Holdings.
Diversification Opportunities for Travis Perkins and Burnham Holdings
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Travis and Burnham is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Travis Perkins PLC and Burnham Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burnham Holdings and Travis Perkins 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 Travis Perkins PLC are associated (or correlated) with Burnham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burnham Holdings has no effect on the direction of Travis Perkins i.e., Travis Perkins and Burnham Holdings go up and down completely randomly.
Pair Corralation between Travis Perkins and Burnham Holdings
Assuming the 90 days horizon Travis Perkins PLC is expected to under-perform the Burnham Holdings. In addition to that, Travis Perkins is 1.03 times more volatile than Burnham Holdings. It trades about -0.29 of its total potential returns per unit of risk. Burnham Holdings is currently generating about 0.05 per unit of volatility. If you would invest 1,409 in Burnham Holdings on August 26, 2024 and sell it today you would earn a total of 30.00 from holding Burnham Holdings or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Travis Perkins PLC vs. Burnham Holdings
Performance |
| Timeline |
| Travis Perkins PLC |
| Burnham Holdings |
Travis Perkins and Burnham Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travis Perkins and Burnham Holdings
The main advantage of trading using opposite Travis Perkins and Burnham Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travis Perkins position performs unexpectedly, Burnham Holdings 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 Burnham Holdings will offset losses from the drop in Burnham Holdings' long position.| Travis Perkins vs. Trane Technologies plc | Travis Perkins vs. Carrier Global Corp | Travis Perkins vs. Johnson Controls International | Travis Perkins vs. Lennox International |
| Burnham Holdings vs. Travis Perkins PLC | Burnham Holdings vs. Armstrong World Industries | Burnham Holdings vs. Apogee Enterprises |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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