Correlation Between Diageo PLC and GASBCM

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

By analyzing existing cross correlation between Diageo PLC ADR and GASBCM 6129 23 FEB 38, you can compare the effects of market volatilities on Diageo PLC and GASBCM 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 Diageo PLC with a short position of GASBCM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and GASBCM.

Diversification Opportunities for Diageo PLC and GASBCM

-0.29

Correlation Coefficient

Diageo PLC  GASBCM

Very good diversification

The 3 months correlation between Diageo and GASBCM is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC ADR and GASBCM 6129 23 FEB 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GASBCM 6129 23 and Diageo 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 Diageo PLC ADR are associated (or correlated) with GASBCM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GASBCM 6129 23 has no effect on the direction of Diageo PLC i.e., Diageo PLC and GASBCM go up and down completely randomly.

Pair Corralation between Diageo PLC and GASBCM

Considering the 90-day investment horizon Diageo PLC ADR is expected to generate 1.32 times more return on investment than GASBCM. However, Diageo PLC is 1.32 times more volatile than GASBCM 6129 23 FEB 38. It trades about -0.09 of its potential returns per unit of risk. GASBCM 6129 23 FEB 38 is currently generating about -0.16 per unit of risk. If you would invest  12,481  in Diageo PLC ADR on December 11, 2024 and sell it today you would lose (1,262) from holding Diageo PLC ADR or give up 10.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	20.34%
Values	Daily Returns

Diageo PLC ADR  vs.  GASBCM 6129 23 FEB 38

Diageo PLC ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diageo PLC ADR 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

GASBCM 6129 23

Risk-Adjusted Performance

Very Weak

Over the last 90 days GASBCM 6129 23 FEB 38 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for GASBCM 6129 23 FEB 38 investors.

Pair Trading with Diageo PLC and GASBCM

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

The idea behind Diageo PLC ADR and GASBCM 6129 23 FEB 38 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.