Correlation Between Diageo Plc and Hawesko Holding
Can any of the company-specific risk be diversified away by investing in both Diageo Plc and Hawesko Holding 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 Hawesko Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diageo plc and Hawesko Holding AG, you can compare the effects of market volatilities on Diageo Plc and Hawesko Holding 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 Hawesko Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo Plc and Hawesko Holding.
Diversification Opportunities for Diageo Plc and Hawesko Holding
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Diageo and Hawesko is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Diageo plc and Hawesko Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawesko Holding AG 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 are associated (or correlated) with Hawesko Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawesko Holding AG has no effect on the direction of Diageo Plc i.e., Diageo Plc and Hawesko Holding go up and down completely randomly.
Pair Corralation between Diageo Plc and Hawesko Holding
Assuming the 90 days trading horizon Diageo plc is expected to generate 0.6 times more return on investment than Hawesko Holding. However, Diageo plc is 1.67 times less risky than Hawesko Holding. It trades about 0.01 of its potential returns per unit of risk. Hawesko Holding AG is currently generating about 0.0 per unit of risk. If you would invest 2,995 in Diageo plc on September 22, 2024 and sell it today you would earn a total of 30.00 from holding Diageo plc or generate 1.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Diageo plc vs. Hawesko Holding AG
Performance |
Timeline |
Diageo plc |
Hawesko Holding AG |
Diageo Plc and Hawesko Holding Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Diageo Plc and Hawesko Holding
The main advantage of trading using opposite Diageo Plc and Hawesko Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo Plc position performs unexpectedly, Hawesko Holding 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 Hawesko Holding will offset losses from the drop in Hawesko Holding's long position.Diageo Plc vs. Pernod Ricard SA | Diageo Plc vs. MGP Ingredients | Diageo Plc vs. Hawesko Holding AG | Diageo Plc vs. ANDREW PELLER LTD |
Hawesko Holding vs. Diageo plc | Hawesko Holding vs. Pernod Ricard SA | Hawesko Holding vs. MGP Ingredients | Hawesko Holding vs. ANDREW PELLER LTD |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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