Correlation Between Whitbread PLC and Deltex Medical
Can any of the company-specific risk be diversified away by investing in both Whitbread PLC and Deltex Medical 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 Deltex Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whitbread PLC and Deltex Medical Group, you can compare the effects of market volatilities on Whitbread PLC and Deltex Medical 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 Deltex Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitbread PLC and Deltex Medical.
Diversification Opportunities for Whitbread PLC and Deltex Medical
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Whitbread and Deltex is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Whitbread PLC and Deltex Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deltex Medical Group 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 Deltex Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deltex Medical Group has no effect on the direction of Whitbread PLC i.e., Whitbread PLC and Deltex Medical go up and down completely randomly.
Pair Corralation between Whitbread PLC and Deltex Medical
Assuming the 90 days trading horizon Whitbread PLC is expected to generate 0.5 times more return on investment than Deltex Medical. However, Whitbread PLC is 1.99 times less risky than Deltex Medical. It trades about -0.03 of its potential returns per unit of risk. Deltex Medical Group is currently generating about -0.22 per unit of risk. If you would invest 303,184 in Whitbread PLC on September 13, 2024 and sell it today you would lose (8,584) from holding Whitbread PLC or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Whitbread PLC vs. Deltex Medical Group
Performance |
| Timeline |
| Whitbread PLC |
| Deltex Medical Group |
Whitbread PLC and Deltex Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitbread PLC and Deltex Medical
The main advantage of trading using opposite Whitbread PLC and Deltex Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitbread PLC position performs unexpectedly, Deltex Medical 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 Deltex Medical will offset losses from the drop in Deltex Medical's long position.| Whitbread PLC vs. Morgan Advanced Materials | Whitbread PLC vs. Silvercorp Metals | Whitbread PLC vs. Hochschild Mining plc | Whitbread PLC vs. Ross Stores |
| Deltex Medical vs. Silvercorp Metals | Deltex Medical vs. Jacquet Metal Service | Deltex Medical vs. National Beverage Corp | Deltex Medical vs. Empire Metals Limited |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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