Correlation Between Yellow Pages and SSE PLC
Can any of the company-specific risk be diversified away by investing in both Yellow Pages and SSE PLC 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 Yellow Pages and SSE PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yellow Pages Limited and SSE PLC ADR, you can compare the effects of market volatilities on Yellow Pages and SSE PLC 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 Yellow Pages with a short position of SSE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yellow Pages and SSE PLC.
Diversification Opportunities for Yellow Pages and SSE PLC
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Yellow and SSE is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Pages Limited and SSE PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSE PLC ADR and Yellow Pages 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 Yellow Pages Limited are associated (or correlated) with SSE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSE PLC ADR has no effect on the direction of Yellow Pages i.e., Yellow Pages and SSE PLC go up and down completely randomly.
Pair Corralation between Yellow Pages and SSE PLC
Assuming the 90 days horizon Yellow Pages Limited is expected to under-perform the SSE PLC. In addition to that, Yellow Pages is 1.21 times more volatile than SSE PLC ADR. It trades about -0.11 of its total potential returns per unit of risk. SSE PLC ADR is currently generating about -0.01 per unit of volatility. If you would invest 1,873 in SSE PLC ADR on November 2, 2024 and sell it today you would lose (13.00) from holding SSE PLC ADR or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yellow Pages Limited vs. SSE PLC ADR
Performance |
| Timeline |
| Yellow Pages Limited |
| SSE PLC ADR |
Yellow Pages and SSE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yellow Pages and SSE PLC
The main advantage of trading using opposite Yellow Pages and SSE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yellow Pages position performs unexpectedly, SSE PLC 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 SSE PLC will offset losses from the drop in SSE PLC's long position.| Yellow Pages vs. RELX PLC | Yellow Pages vs. Relx PLC ADR | Yellow Pages vs. Wolters Kluwer NV | Yellow Pages vs. WOLTERS KLUWER ADR |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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