Correlation Between Trainline Plc and Optima Health
Can any of the company-specific risk be diversified away by investing in both Trainline Plc and Optima Health 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 Optima Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trainline Plc and Optima Health plc, you can compare the effects of market volatilities on Trainline Plc and Optima Health 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 Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trainline Plc and Optima Health.
Diversification Opportunities for Trainline Plc and Optima Health
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Trainline and Optima is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Trainline Plc and Optima Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Health 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 Optima Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Health plc has no effect on the direction of Trainline Plc i.e., Trainline Plc and Optima Health go up and down completely randomly.
Pair Corralation between Trainline Plc and Optima Health
Assuming the 90 days trading horizon Trainline Plc is expected to generate 1.92 times more return on investment than Optima Health. However, Trainline Plc is 1.92 times more volatile than Optima Health plc. It trades about 0.03 of its potential returns per unit of risk. Optima Health plc is currently generating about 0.02 per unit of risk. If you would invest 30,560 in Trainline Plc on September 3, 2024 and sell it today you would earn a total of 9,900 from holding Trainline Plc or generate 32.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 9.64% |
| Values | Daily Returns |
Trainline Plc vs. Optima Health plc
Performance |
| Timeline |
| Trainline Plc |
| Optima Health plc |
Trainline Plc and Optima Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trainline Plc and Optima Health
The main advantage of trading using opposite Trainline Plc and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trainline Plc position performs unexpectedly, Optima Health 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 Optima Health will offset losses from the drop in Optima Health's long position.| Trainline Plc vs. GoldMining | Trainline Plc vs. Metals Exploration Plc | Trainline Plc vs. Panther Metals PLC | Trainline Plc vs. Endeavour Mining Corp |
| Optima Health vs. Vulcan Materials Co | Optima Health vs. Morgan Advanced Materials | Optima Health vs. Verizon Communications | Optima Health vs. Zoom Video Communications |
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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