Correlation Between Transportadora and Bunzl Plc
Can any of the company-specific risk be diversified away by investing in both Transportadora and Bunzl 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 Transportadora and Bunzl Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transportadora de Gas and Bunzl plc, you can compare the effects of market volatilities on Transportadora and Bunzl 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 Transportadora with a short position of Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and Bunzl Plc.
Diversification Opportunities for Transportadora and Bunzl Plc
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Transportadora and Bunzl is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc and Transportadora 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 Transportadora de Gas are associated (or correlated) with Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of Transportadora i.e., Transportadora and Bunzl Plc go up and down completely randomly.
Pair Corralation between Transportadora and Bunzl Plc
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 4.05 times more return on investment than Bunzl Plc. However, Transportadora is 4.05 times more volatile than Bunzl plc. It trades about 0.22 of its potential returns per unit of risk. Bunzl plc is currently generating about -0.05 per unit of risk. If you would invest 1,740 in Transportadora de Gas on October 7, 2024 and sell it today you would earn a total of 1,460 from holding Transportadora de Gas or generate 83.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Transportadora de Gas vs. Bunzl plc
Performance |
Timeline |
Transportadora de Gas |
Bunzl plc |
Transportadora and Bunzl Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Transportadora and Bunzl Plc
The main advantage of trading using opposite Transportadora and Bunzl Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, Bunzl 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 Bunzl Plc will offset losses from the drop in Bunzl Plc's long position.Transportadora vs. EMBARK EDUCATION LTD | Transportadora vs. CHINA EDUCATION GROUP | Transportadora vs. G8 EDUCATION | Transportadora vs. Algonquin Power Utilities |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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