Correlation Between Shell Plc and Quilter PLC

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

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

Diversification Opportunities for Shell Plc and Quilter PLC

0.17

Correlation Coefficient

Shell Plc  Quilter PLC

Average diversification

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

Pair Corralation between Shell Plc and Quilter PLC

Assuming the 90 days trading horizon Shell plc is expected to generate 0.55 times more return on investment than Quilter PLC. However, Shell plc is 1.81 times less risky than Quilter PLC. It trades about 0.19 of its potential returns per unit of risk. Quilter PLC is currently generating about 0.03 per unit of risk. If you would invest  244,142  in Shell plc on December 30, 2024 and sell it today you would earn a total of  35,508  from holding Shell plc or generate 14.54% return on investment over 90 days.

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

Shell plc  vs.  Quilter PLC

Shell plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shell plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Shell Plc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Quilter PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quilter PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Quilter PLC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Shell Plc and Quilter PLC

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

The idea behind Shell plc and Quilter 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.