Correlation Between 3I Group and Moneysupermarket

Can any of the company-specific risk be diversified away by investing in both 3I Group and Moneysupermarket 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 3I Group and Moneysupermarket into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3I Group PLC and MoneysupermarketCom Group PLC, you can compare the effects of market volatilities on 3I Group and Moneysupermarket 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 3I Group with a short position of Moneysupermarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3I Group and Moneysupermarket.

Diversification Opportunities for 3I Group and Moneysupermarket

0.17

Correlation Coefficient

3I Group  Moneysupermarket

Average diversification

The 3 months correlation between III and Moneysupermarket is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding 3I Group PLC and MoneysupermarketCom Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MoneysupermarketCom and 3I Group 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 3I Group PLC are associated (or correlated) with Moneysupermarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MoneysupermarketCom has no effect on the direction of 3I Group i.e., 3I Group and Moneysupermarket go up and down completely randomly.

Pair Corralation between 3I Group and Moneysupermarket

Assuming the 90 days trading horizon 3I Group is expected to generate 1.51 times less return on investment than Moneysupermarket. But when comparing it to its historical volatility, 3I Group PLC is 1.11 times less risky than Moneysupermarket. It trades about 0.06 of its potential returns per unit of risk. MoneysupermarketCom Group PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  19,140  in MoneysupermarketCom Group PLC on December 28, 2024 and sell it today you would earn a total of  1,380  from holding MoneysupermarketCom Group PLC or generate 7.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

3I Group PLC  vs.  MoneysupermarketCom Group PLC

3I Group PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 3I Group PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, 3I Group is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

MoneysupermarketCom

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MoneysupermarketCom Group PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Moneysupermarket may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with 3I Group and Moneysupermarket

The main advantage of trading using opposite 3I Group and Moneysupermarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3I Group position performs unexpectedly, Moneysupermarket 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 Moneysupermarket will offset losses from the drop in Moneysupermarket's long position.

The idea behind 3I Group PLC and MoneysupermarketCom Group 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.