Correlation Between Glanbia PLC and Great Western

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

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

Diversification Opportunities for Glanbia PLC and Great Western

-0.41

Correlation Coefficient

Glanbia PLC  Great Western

Very good diversification

The 3 months correlation between Glanbia and Great is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Glanbia PLC and Great Western Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Western Mining and Glanbia 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 Glanbia PLC are associated (or correlated) with Great Western. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Western Mining has no effect on the direction of Glanbia PLC i.e., Glanbia PLC and Great Western go up and down completely randomly.

Pair Corralation between Glanbia PLC and Great Western

If you would invest  1,337  in Glanbia PLC on October 20, 2024 and sell it today you would earn a total of  76.00  from holding Glanbia PLC or generate 5.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Glanbia PLC  vs.  Great Western Mining

Glanbia PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glanbia PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Great Western Mining

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great Western Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Great Western reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Glanbia PLC and Great Western

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

The idea behind Glanbia PLC and Great Western Mining 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.