Correlation Between Versarien PLC and LBG Media
Can any of the company-specific risk be diversified away by investing in both Versarien PLC 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 Versarien PLC and LBG Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Versarien PLC and LBG Media PLC, you can compare the effects of market volatilities on Versarien PLC 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 Versarien PLC with a short position of LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Versarien PLC and LBG Media.
Diversification Opportunities for Versarien PLC and LBG Media
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Versarien and LBG is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Versarien 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 Versarien 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 Versarien 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 Versarien PLC i.e., Versarien PLC and LBG Media go up and down completely randomly.
Pair Corralation between Versarien PLC and LBG Media
Assuming the 90 days trading horizon Versarien PLC is expected to under-perform the LBG Media. In addition to that, Versarien PLC is 3.15 times more volatile than LBG Media PLC. It trades about -0.03 of its total potential returns per unit of risk. LBG Media PLC is currently generating about -0.06 per unit of volatility. If you would invest 12,800 in LBG Media PLC on September 14, 2024 and sell it today you would lose (400.00) from holding LBG Media PLC or give up 3.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Versarien PLC vs. LBG Media PLC
Performance |
| Timeline |
| Versarien PLC |
| LBG Media PLC |
Versarien PLC and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Versarien PLC and LBG Media
The main advantage of trading using opposite Versarien PLC and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Versarien PLC 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.| Versarien PLC vs. MediaZest plc | Versarien PLC vs. Iron Mountain | Versarien PLC vs. Seche Environnement SA | Versarien PLC vs. Centaur Media |
| LBG Media vs. Aurora Investment Trust | LBG Media vs. Spirent Communications plc | LBG Media vs. FC Investment Trust | LBG Media vs. Team Internet Group |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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