Correlation Between Various Eateries and LBG Media
Can any of the company-specific risk be diversified away by investing in both Various Eateries and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on Various Eateries and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Various Eateries and LBG Media.
Diversification Opportunities for Various Eateries and LBG Media
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Various and LBG is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Various Eateries PLC and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Various Eateries i.e., Various Eateries and LBG Media go up and down completely randomly.
Pair Corralation between Various Eateries and LBG Media
Assuming the 90 days trading horizon Various Eateries PLC is expected to under-perform the LBG Media. But the stock apears to be less risky and, when comparing its historical volatility, Various Eateries PLC is 1.65 times less risky than LBG Media. The stock trades about -0.32 of its potential returns per unit of risk. The LBG Media PLC is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 12,700 in LBG Media PLC on November 6, 2024 and sell it today you would lose (300.00) from holding LBG Media PLC or give up 2.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Various Eateries PLC vs. LBG Media PLC
Performance |
| Timeline |
| Various Eateries PLC |
| LBG Media PLC |
Various Eateries and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Various Eateries and LBG Media
The main advantage of trading using opposite Various Eateries and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Various Eateries position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.| Various Eateries vs. Alien Metals | Various Eateries vs. Gaztransport et Technigaz | Various Eateries vs. GreenX Metals | Various Eateries vs. UNIQA Insurance Group |
| LBG Media vs. Playtech Plc | LBG Media vs. International Biotechnology Trust | LBG Media vs. Travel Leisure Co | LBG Media vs. Southwest Airlines Co |
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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