Correlation Between Various Eateries and Centrica PLC
Can any of the company-specific risk be diversified away by investing in both Various Eateries 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 Various Eateries and Centrica PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Various Eateries PLC and Centrica PLC, you can compare the effects of market volatilities on Various Eateries 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 Various Eateries with a short position of Centrica PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Various Eateries and Centrica PLC.
Diversification Opportunities for Various Eateries and Centrica PLC
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Various and Centrica is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Various Eateries PLC and Centrica PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrica PLC and Various Eateries 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 Various Eateries PLC 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 Various Eateries i.e., Various Eateries and Centrica PLC go up and down completely randomly.
Pair Corralation between Various Eateries and Centrica PLC
Assuming the 90 days trading horizon Various Eateries PLC is expected to under-perform the Centrica PLC. But the stock apears to be less risky and, when comparing its historical volatility, Various Eateries PLC is 3.07 times less risky than Centrica PLC. The stock trades about -0.31 of its potential returns per unit of risk. The Centrica PLC is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 11,850 in Centrica PLC on September 14, 2024 and sell it today you would earn a total of 1,310 from holding Centrica PLC or generate 11.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Various Eateries PLC vs. Centrica PLC
Performance |
| Timeline |
| Various Eateries PLC |
| Centrica PLC |
Various Eateries and Centrica PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Various Eateries and Centrica PLC
The main advantage of trading using opposite Various Eateries and Centrica PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Various Eateries 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.| Various Eateries vs. Verizon Communications | Various Eateries vs. Young Cos Brewery | Various Eateries vs. mobilezone holding AG | Various Eateries vs. Infrastrutture Wireless Italiane |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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