Correlation Between Segro Plc and Tatton Asset

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

By analyzing existing cross correlation between Segro Plc and Tatton Asset Management, you can compare the effects of market volatilities on Segro Plc and Tatton Asset 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 Tatton Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Segro Plc and Tatton Asset.

Diversification Opportunities for Segro Plc and Tatton Asset

-0.38

Correlation Coefficient

Segro Plc  Tatton Asset

Very good diversification

The 3 months correlation between Segro and Tatton is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Segro Plc and Tatton Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatton Asset Management 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 Tatton Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatton Asset Management has no effect on the direction of Segro Plc i.e., Segro Plc and Tatton Asset go up and down completely randomly.

Pair Corralation between Segro Plc and Tatton Asset

Assuming the 90 days trading horizon Segro Plc is expected to under-perform the Tatton Asset. But the stock apears to be less risky and, when comparing its historical volatility, Segro Plc is 1.24 times less risky than Tatton Asset. The stock trades about -0.27 of its potential returns per unit of risk. The Tatton Asset Management is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  64,515  in Tatton Asset Management on October 10, 2024 and sell it today you would earn a total of  4,285  from holding Tatton Asset Management or generate 6.64% return on investment over 90 days.

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

Segro Plc  vs.  Tatton Asset Management

Segro Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Segro Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Tatton Asset Management

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tatton Asset Management are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Tatton Asset may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Segro Plc and Tatton Asset

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

The idea behind Segro Plc and Tatton Asset Management 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.