Correlation Between SEGRO Plc and Yara International

Can any of the company-specific risk be diversified away by investing in both SEGRO Plc and Yara International 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 SEGRO Plc and Yara International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SEGRO Plc and Yara International ASA, you can compare the effects of market volatilities on SEGRO Plc and Yara International 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 SEGRO Plc with a short position of Yara International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEGRO Plc and Yara International.

Diversification Opportunities for SEGRO Plc and Yara International

0.53

Correlation Coefficient

SEGRO Plc  Yara International

Very weak diversification

The 3 months correlation between SEGRO and Yara is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding SEGRO Plc and Yara International ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yara International ASA and SEGRO 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 SEGRO Plc are associated (or correlated) with Yara International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yara International ASA has no effect on the direction of SEGRO Plc i.e., SEGRO Plc and Yara International go up and down completely randomly.

Pair Corralation between SEGRO Plc and Yara International

Assuming the 90 days trading horizon SEGRO Plc is expected to under-perform the Yara International. But the stock apears to be less risky and, when comparing its historical volatility, SEGRO Plc is 1.04 times less risky than Yara International. The stock trades about -0.08 of its potential returns per unit of risk. The Yara International ASA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,177  in Yara International ASA on December 3, 2024 and sell it today you would earn a total of  23.00  from holding Yara International ASA or generate 1.06% return on investment over 90 days.

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

SEGRO Plc  vs.  Yara International ASA

SEGRO Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEGRO Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Yara International ASA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yara International ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Yara International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SEGRO Plc and Yara International

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

The idea behind SEGRO Plc and Yara International ASA 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.