Correlation Between Bunzl Plc and Metrospaces

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

By analyzing existing cross correlation between Bunzl plc and Metrospaces, you can compare the effects of market volatilities on Bunzl Plc and Metrospaces 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 Bunzl Plc with a short position of Metrospaces. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunzl Plc and Metrospaces.

Diversification Opportunities for Bunzl Plc and Metrospaces

0.15

Correlation Coefficient

Bunzl Plc  Metrospaces

Average diversification

The 3 months correlation between Bunzl and Metrospaces is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bunzl plc and Metrospaces in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrospaces and Bunzl 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 Bunzl plc are associated (or correlated) with Metrospaces. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrospaces has no effect on the direction of Bunzl Plc i.e., Bunzl Plc and Metrospaces go up and down completely randomly.

Pair Corralation between Bunzl Plc and Metrospaces

Assuming the 90 days horizon Bunzl plc is expected to under-perform the Metrospaces. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bunzl plc is 120.44 times less risky than Metrospaces. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Metrospaces is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Metrospaces on December 1, 2024 and sell it today you would lose (0.01) from holding Metrospaces or give up 100.0% of portfolio value over 90 days.

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

Bunzl plc  vs.  Metrospaces

Bunzl plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bunzl plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Metrospaces

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metrospaces are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Metrospaces exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bunzl Plc and Metrospaces

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

The idea behind Bunzl plc and Metrospaces 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.