Correlation Between TRAINLINE PLC and Imperial Brands

Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and Imperial Brands 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 Imperial Brands 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 Imperial Brands PLC, you can compare the effects of market volatilities on TRAINLINE PLC and Imperial Brands 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 Imperial Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and Imperial Brands.

Diversification Opportunities for TRAINLINE PLC and Imperial Brands

0.0

Correlation Coefficient

TRAINLINE PLC  Imperial Brands

Pay attention - limited upside

The 3 months correlation between TRAINLINE and Imperial is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and Imperial Brands PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Brands PLC 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 Imperial Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Brands PLC has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and Imperial Brands go up and down completely randomly.

Pair Corralation between TRAINLINE PLC and Imperial Brands

If you would invest  398.00  in TRAINLINE PLC LS on October 24, 2024 and sell it today you would earn a total of  42.00  from holding TRAINLINE PLC LS or generate 10.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

TRAINLINE PLC LS  vs.  Imperial Brands PLC

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 reported solid returns over the last few months and may actually be approaching a breakup point.

Imperial Brands PLC

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Imperial Brands PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Imperial Brands is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TRAINLINE PLC and Imperial Brands

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

The idea behind TRAINLINE PLC LS and Imperial Brands PLC 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.