Correlation Between Whitbread PLC and Albion Technology
Can any of the company-specific risk be diversified away by investing in both Whitbread PLC and Albion Technology 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 Whitbread PLC and Albion Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whitbread PLC and Albion Technology General, you can compare the effects of market volatilities on Whitbread PLC and Albion Technology 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 Whitbread PLC with a short position of Albion Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitbread PLC and Albion Technology.
Diversification Opportunities for Whitbread PLC and Albion Technology
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Whitbread and Albion is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Whitbread PLC and Albion Technology General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albion Technology General and Whitbread 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 Whitbread PLC are associated (or correlated) with Albion Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albion Technology General has no effect on the direction of Whitbread PLC i.e., Whitbread PLC and Albion Technology go up and down completely randomly.
Pair Corralation between Whitbread PLC and Albion Technology
Assuming the 90 days trading horizon Whitbread PLC is expected to under-perform the Albion Technology. But the stock apears to be less risky and, when comparing its historical volatility, Whitbread PLC is 1.91 times less risky than Albion Technology. The stock trades about -0.53 of its potential returns per unit of risk. The Albion Technology General is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 6,962 in Albion Technology General on September 4, 2024 and sell it today you would lose (112.00) from holding Albion Technology General or give up 1.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Whitbread PLC vs. Albion Technology General
Performance |
| Timeline |
| Whitbread PLC |
| Albion Technology General |
Whitbread PLC and Albion Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitbread PLC and Albion Technology
The main advantage of trading using opposite Whitbread PLC and Albion Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitbread PLC position performs unexpectedly, Albion Technology 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 Albion Technology will offset losses from the drop in Albion Technology's long position.| Whitbread PLC vs. Samsung Electronics Co | Whitbread PLC vs. Samsung Electronics Co | Whitbread PLC vs. Hyundai Motor | Whitbread PLC vs. Toyota Motor Corp |
| Albion Technology vs. Griffin Mining | Albion Technology vs. Caledonia Mining | Albion Technology vs. Wyndham Hotels Resorts | Albion Technology vs. Eastinco Mining Exploration |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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