Correlation Between Guaranty Trust and Bloomsbury Publishing

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

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

Diversification Opportunities for Guaranty Trust and Bloomsbury Publishing

-0.34

Correlation Coefficient

Guaranty Trust  Bloomsbury Publishing

Very good diversification

The 3 months correlation between Guaranty and Bloomsbury is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Guaranty Trust Holding and Bloomsbury Publishing Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomsbury Publishing Plc and Guaranty Trust 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 Guaranty Trust Holding are associated (or correlated) with Bloomsbury Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomsbury Publishing Plc has no effect on the direction of Guaranty Trust i.e., Guaranty Trust and Bloomsbury Publishing go up and down completely randomly.

Pair Corralation between Guaranty Trust and Bloomsbury Publishing

Assuming the 90 days trading horizon Guaranty Trust is expected to generate 1.99 times less return on investment than Bloomsbury Publishing. In addition to that, Guaranty Trust is 2.29 times more volatile than Bloomsbury Publishing Plc. It trades about 0.01 of its total potential returns per unit of risk. Bloomsbury Publishing Plc is currently generating about 0.05 per unit of volatility. If you would invest  43,144  in Bloomsbury Publishing Plc on October 9, 2024 and sell it today you would earn a total of  23,256  from holding Bloomsbury Publishing Plc or generate 53.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Guaranty Trust Holding  vs.  Bloomsbury Publishing Plc

Guaranty Trust Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guaranty Trust Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Guaranty Trust disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bloomsbury Publishing Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bloomsbury Publishing Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bloomsbury Publishing is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Guaranty Trust and Bloomsbury Publishing

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

The idea behind Guaranty Trust Holding and Bloomsbury Publishing 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.