Correlation Between Zegona Communications and WW Grainger
Can any of the company-specific risk be diversified away by investing in both Zegona Communications and WW Grainger 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 Zegona Communications and WW Grainger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and WW Grainger, you can compare the effects of market volatilities on Zegona Communications and WW Grainger 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 Zegona Communications with a short position of WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and WW Grainger.
Diversification Opportunities for Zegona Communications and WW Grainger
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zegona and 0IZI is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger and Zegona Communications 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 Zegona Communications Plc are associated (or correlated) with WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of Zegona Communications i.e., Zegona Communications and WW Grainger go up and down completely randomly.
Pair Corralation between Zegona Communications and WW Grainger
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 2.21 times more return on investment than WW Grainger. However, Zegona Communications is 2.21 times more volatile than WW Grainger. It trades about 0.11 of its potential returns per unit of risk. WW Grainger is currently generating about -0.22 per unit of risk. If you would invest 30,600 in Zegona Communications Plc on September 12, 2024 and sell it today you would earn a total of 1,800 from holding Zegona Communications Plc or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Zegona Communications Plc vs. WW Grainger
Performance |
| Timeline |
| Zegona Communications Plc |
| WW Grainger |
Zegona Communications and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and WW Grainger
The main advantage of trading using opposite Zegona Communications and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications position performs unexpectedly, WW Grainger 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 WW Grainger will offset losses from the drop in WW Grainger's long position.| Zegona Communications vs. Catalyst Media Group | Zegona Communications vs. CATLIN GROUP | Zegona Communications vs. Tamburi Investment Partners | Zegona Communications vs. Magnora ASA |
| WW Grainger vs. Vitec Software Group | WW Grainger vs. Associated British Foods | WW Grainger vs. International Biotechnology Trust | WW Grainger vs. Ashtead Technology Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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