Correlation Between XLMedia PLC and NatWest Group
Can any of the company-specific risk be diversified away by investing in both XLMedia PLC and NatWest Group 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 NatWest Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XLMedia PLC and NatWest Group PLC, you can compare the effects of market volatilities on XLMedia PLC and NatWest Group 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 NatWest Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and NatWest Group.
Diversification Opportunities for XLMedia PLC and NatWest Group
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between XLMedia and NatWest is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and NatWest Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NatWest Group 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 NatWest Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NatWest Group PLC has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and NatWest Group go up and down completely randomly.
Pair Corralation between XLMedia PLC and NatWest Group
Assuming the 90 days trading horizon XLMedia PLC is expected to generate 3.53 times more return on investment than NatWest Group. However, XLMedia PLC is 3.53 times more volatile than NatWest Group PLC. It trades about 0.04 of its potential returns per unit of risk. NatWest Group PLC is currently generating about 0.07 per unit of risk. If you would invest 825.00 in XLMedia PLC on September 2, 2024 and sell it today you would earn a total of 365.00 from holding XLMedia PLC or generate 44.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
XLMedia PLC vs. NatWest Group PLC
Performance |
| Timeline |
| XLMedia PLC |
| NatWest Group PLC |
XLMedia PLC and NatWest Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XLMedia PLC and NatWest Group
The main advantage of trading using opposite XLMedia PLC and NatWest Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC position performs unexpectedly, NatWest Group 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 NatWest Group will offset losses from the drop in NatWest Group's long position.| XLMedia PLC vs. Premier Foods PLC | XLMedia PLC vs. Endeavour Mining Corp | XLMedia PLC vs. Associated British Foods | XLMedia PLC vs. Bisichi Mining PLC |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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