Correlation Between Rolls Royce and Workspace Group
Can any of the company-specific risk be diversified away by investing in both Rolls Royce and Workspace Group 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 Rolls Royce and Workspace Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rolls Royce Holdings PLC and Workspace Group PLC, you can compare the effects of market volatilities on Rolls Royce and Workspace Group 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 Rolls Royce with a short position of Workspace Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rolls Royce and Workspace Group.
Diversification Opportunities for Rolls Royce and Workspace Group
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rolls and Workspace is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Rolls Royce Holdings PLC and Workspace Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workspace Group PLC and Rolls Royce 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 Rolls Royce Holdings PLC are associated (or correlated) with Workspace Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workspace Group PLC has no effect on the direction of Rolls Royce i.e., Rolls Royce and Workspace Group go up and down completely randomly.
Pair Corralation between Rolls Royce and Workspace Group
Assuming the 90 days trading horizon Rolls Royce Holdings PLC is expected to generate 1.06 times more return on investment than Workspace Group. However, Rolls Royce is 1.06 times more volatile than Workspace Group PLC. It trades about 0.14 of its potential returns per unit of risk. Workspace Group PLC is currently generating about -0.23 per unit of risk. If you would invest 50,120 in Rolls Royce Holdings PLC on September 13, 2024 and sell it today you would earn a total of 7,580 from holding Rolls Royce Holdings PLC or generate 15.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Rolls Royce Holdings PLC vs. Workspace Group PLC
Performance |
Timeline |
Rolls Royce Holdings |
Workspace Group PLC |
Rolls Royce and Workspace Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rolls Royce and Workspace Group
The main advantage of trading using opposite Rolls Royce and Workspace Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rolls Royce position performs unexpectedly, Workspace Group 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 Workspace Group will offset losses from the drop in Workspace Group's long position.Rolls Royce vs. Samsung Electronics Co | Rolls Royce vs. Samsung Electronics Co | Rolls Royce vs. Hyundai Motor | Rolls Royce vs. Toyota Motor Corp |
Workspace Group vs. Samsung Electronics Co | Workspace Group vs. Spirent Communications plc | Workspace Group vs. New Residential Investment | Workspace Group vs. Batm Advanced Communications |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |