Correlation Between CAMEBO and Diageo PLC

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Can any of the company-specific risk be diversified away by investing in both CAMEBO and Diageo 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 CAMEBO and Diageo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAMEBO 525 27 APR 29 and Diageo PLC ADR, you can compare the effects of market volatilities on CAMEBO and Diageo 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 CAMEBO with a short position of Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAMEBO and Diageo PLC.

Diversification Opportunities for CAMEBO and Diageo PLC

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between CAMEBO and Diageo is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding CAMEBO 525 27 APR 29 and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR and CAMEBO 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 CAMEBO 525 27 APR 29 are associated (or correlated) with Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of CAMEBO i.e., CAMEBO and Diageo PLC go up and down completely randomly.

Pair Corralation between CAMEBO and Diageo PLC

Assuming the 90 days trading horizon CAMEBO 525 27 APR 29 is expected to under-perform the Diageo PLC. But the bond apears to be less risky and, when comparing its historical volatility, CAMEBO 525 27 APR 29 is 1.2 times less risky than Diageo PLC. The bond trades about -0.44 of its potential returns per unit of risk. The Diageo PLC ADR is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  12,357  in Diageo PLC ADR on September 3, 2024 and sell it today you would lose (421.00) from holding Diageo PLC ADR or give up 3.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy45.0%
ValuesDaily Returns

CAMEBO 525 27 APR 29  vs.  Diageo PLC ADR

 Performance 
       Timeline  
CAMEBO 525 27 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CAMEBO 525 27 APR 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for CAMEBO 525 27 APR 29 investors.
Diageo PLC ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Diageo PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

CAMEBO and Diageo PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CAMEBO and Diageo PLC

The main advantage of trading using opposite CAMEBO and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAMEBO position performs unexpectedly, Diageo 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.
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The idea behind CAMEBO 525 27 APR 29 and Diageo PLC ADR 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.
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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 Global Correlations module to find global opportunities by holding instruments from different markets.

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