Correlation Between Trainline Plc and Bunzl PLC
Can any of the company-specific risk be diversified away by investing in both Trainline Plc 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 Trainline Plc and Bunzl PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trainline Plc and Bunzl PLC, you can compare the effects of market volatilities on Trainline Plc 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 Trainline Plc with a short position of Bunzl PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trainline Plc and Bunzl PLC.
Diversification Opportunities for Trainline Plc and Bunzl PLC
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Trainline and Bunzl is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Trainline Plc and Bunzl PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl PLC and Trainline Plc 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 Trainline Plc 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 Trainline Plc i.e., Trainline Plc and Bunzl PLC go up and down completely randomly.
Pair Corralation between Trainline Plc and Bunzl PLC
Assuming the 90 days trading horizon Trainline Plc is expected to generate 1.77 times more return on investment than Bunzl PLC. However, Trainline Plc is 1.77 times more volatile than Bunzl PLC. It trades about 0.1 of its potential returns per unit of risk. Bunzl PLC is currently generating about 0.12 per unit of risk. If you would invest 32,440 in Trainline Plc on September 1, 2024 and sell it today you would earn a total of 8,340 from holding Trainline Plc or generate 25.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
Trainline Plc vs. Bunzl PLC
Performance |
| Timeline |
| Trainline Plc |
| Bunzl PLC |
Trainline Plc and Bunzl PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trainline Plc and Bunzl PLC
The main advantage of trading using opposite Trainline Plc and Bunzl PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trainline Plc 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.| Trainline Plc vs. Herald Investment Trust | Trainline Plc vs. Molson Coors Beverage | Trainline Plc vs. Livermore Investments Group | Trainline Plc vs. Kinnevik Investment AB |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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