Correlation Between XLMedia PLC and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both XLMedia PLC and Fevertree Drinks 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 XLMedia PLC and Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XLMedia PLC and Fevertree Drinks Plc, you can compare the effects of market volatilities on XLMedia PLC and Fevertree Drinks 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 XLMedia PLC with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and Fevertree Drinks.
Diversification Opportunities for XLMedia PLC and Fevertree Drinks
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between XLMedia and Fevertree is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks Plc and XLMedia 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 XLMedia PLC are associated (or correlated) with Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and Fevertree Drinks go up and down completely randomly.
Pair Corralation between XLMedia PLC and Fevertree Drinks
Assuming the 90 days trading horizon XLMedia PLC is expected to generate 0.76 times more return on investment than Fevertree Drinks. However, XLMedia PLC is 1.32 times less risky than Fevertree Drinks. It trades about 0.07 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.18 per unit of risk. If you would invest 1,163 in XLMedia PLC on August 28, 2024 and sell it today you would earn a total of 22.00 from holding XLMedia PLC or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
XLMedia PLC vs. Fevertree Drinks Plc
Performance |
| Timeline |
| XLMedia PLC |
| Fevertree Drinks Plc |
XLMedia PLC and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XLMedia PLC and Fevertree Drinks
The main advantage of trading using opposite XLMedia PLC and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| XLMedia PLC vs. Samsung Electronics Co | XLMedia PLC vs. Samsung Electronics Co | XLMedia PLC vs. Hyundai Motor | XLMedia PLC vs. Toyota Motor Corp |
| Fevertree Drinks vs. Taylor Maritime Investments | Fevertree Drinks vs. Direct Line Insurance | Fevertree Drinks vs. Samsung Electronics Co | Fevertree Drinks vs. Lords Grp Trading |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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