Correlation Between Reckitt Benckiser and Sirius Real

Can any of the company-specific risk be diversified away by investing in both Reckitt Benckiser and Sirius Real 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 Reckitt Benckiser and Sirius Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Reckitt Benckiser Group and Sirius Real Estate, you can compare the effects of market volatilities on Reckitt Benckiser and Sirius Real 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 Reckitt Benckiser with a short position of Sirius Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reckitt Benckiser and Sirius Real.

Diversification Opportunities for Reckitt Benckiser and Sirius Real

-0.31

Correlation Coefficient

Reckitt Benckiser  Sirius Real

Very good diversification

The 3 months correlation between Reckitt and Sirius is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Reckitt Benckiser Group and Sirius Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirius Real Estate and Reckitt Benckiser 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 Reckitt Benckiser Group are associated (or correlated) with Sirius Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirius Real Estate has no effect on the direction of Reckitt Benckiser i.e., Reckitt Benckiser and Sirius Real go up and down completely randomly.

Pair Corralation between Reckitt Benckiser and Sirius Real

Assuming the 90 days trading horizon Reckitt Benckiser Group is expected to generate 0.63 times more return on investment than Sirius Real. However, Reckitt Benckiser Group is 1.59 times less risky than Sirius Real. It trades about 0.14 of its potential returns per unit of risk. Sirius Real Estate is currently generating about -0.06 per unit of risk. If you would invest  485,900  in Reckitt Benckiser Group on December 2, 2024 and sell it today you would earn a total of  38,100  from holding Reckitt Benckiser Group or generate 7.84% return on investment over 90 days.

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

Reckitt Benckiser Group  vs.  Sirius Real Estate

Reckitt Benckiser

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Reckitt Benckiser Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Reckitt Benckiser may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sirius Real Estate

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Reckitt Benckiser and Sirius Real

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

The idea behind Reckitt Benckiser Group and Sirius Real Estate 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.