Correlation Between TRAINLINE PLC and ENTAIN PLC

Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and ENTAIN 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 TRAINLINE PLC and ENTAIN PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TRAINLINE PLC LS and ENTAIN PLC UNSPADR1, you can compare the effects of market volatilities on TRAINLINE PLC and ENTAIN 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 TRAINLINE PLC with a short position of ENTAIN PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and ENTAIN PLC.

Diversification Opportunities for TRAINLINE PLC and ENTAIN PLC

0.27

Correlation Coefficient

TRAINLINE PLC  ENTAIN PLC

Modest diversification

The 3 months correlation between TRAINLINE and ENTAIN is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and ENTAIN PLC UNSPADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENTAIN PLC UNSPADR1 and TRAINLINE 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 TRAINLINE PLC LS are associated (or correlated) with ENTAIN PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENTAIN PLC UNSPADR1 has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and ENTAIN PLC go up and down completely randomly.

Pair Corralation between TRAINLINE PLC and ENTAIN PLC

Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to under-perform the ENTAIN PLC. But the stock apears to be less risky and, when comparing its historical volatility, TRAINLINE PLC LS is 1.06 times less risky than ENTAIN PLC. The stock trades about -0.29 of its potential returns per unit of risk. The ENTAIN PLC UNSPADR1 is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  815.00  in ENTAIN PLC UNSPADR1 on October 25, 2024 and sell it today you would lose (20.00) from holding ENTAIN PLC UNSPADR1 or give up 2.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

TRAINLINE PLC LS  vs.  ENTAIN PLC UNSPADR1

TRAINLINE PLC LS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TRAINLINE PLC LS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAINLINE PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ENTAIN PLC UNSPADR1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENTAIN PLC UNSPADR1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with TRAINLINE PLC and ENTAIN PLC

The main advantage of trading using opposite TRAINLINE PLC and ENTAIN PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC position performs unexpectedly, ENTAIN 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 ENTAIN PLC will offset losses from the drop in ENTAIN PLC's long position.

The idea behind TRAINLINE PLC LS and ENTAIN PLC UNSPADR1 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.