Correlation Between Fevertree Drinks and Trainline Plc

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

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

Diversification Opportunities for Fevertree Drinks and Trainline Plc

-0.82

Correlation Coefficient

Fevertree Drinks  Trainline Plc

Pay attention - limited upside

The 3 months correlation between Fevertree and Trainline is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Trainline Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trainline Plc and Fevertree Drinks 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 Fevertree Drinks Plc are associated (or correlated) with Trainline Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trainline Plc has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Trainline Plc go up and down completely randomly.

Pair Corralation between Fevertree Drinks and Trainline Plc

Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to under-perform the Trainline Plc. But the stock apears to be less risky and, when comparing its historical volatility, Fevertree Drinks Plc is 1.39 times less risky than Trainline Plc. The stock trades about -0.17 of its potential returns per unit of risk. The Trainline Plc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  32,820  in Trainline Plc on October 9, 2024 and sell it today you would earn a total of  8,520  from holding Trainline Plc or generate 25.96% return on investment over 90 days.

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

Fevertree Drinks Plc  vs.  Trainline Plc

Fevertree Drinks Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fevertree Drinks Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Trainline Plc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trainline Plc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Trainline Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fevertree Drinks and Trainline Plc

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

The idea behind Fevertree Drinks Plc and Trainline 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.