Correlation Between Britvic PLC and Investment

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

By analyzing existing cross correlation between Britvic PLC ADR and Investment Of America, you can compare the effects of market volatilities on Britvic PLC and Investment 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 Britvic PLC with a short position of Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Britvic PLC and Investment.

Diversification Opportunities for Britvic PLC and Investment

-0.41

Correlation Coefficient

Britvic PLC  Investment

Very good diversification

The 3 months correlation between Britvic and Investment is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Britvic PLC ADR and Investment Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Of America and Britvic 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 Britvic PLC ADR are associated (or correlated) with Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Of America has no effect on the direction of Britvic PLC i.e., Britvic PLC and Investment go up and down completely randomly.

Pair Corralation between Britvic PLC and Investment

Assuming the 90 days horizon Britvic PLC is expected to generate 1.36 times less return on investment than Investment. In addition to that, Britvic PLC is 1.4 times more volatile than Investment Of America. It trades about 0.08 of its total potential returns per unit of risk. Investment Of America is currently generating about 0.15 per unit of volatility. If you would invest  5,166  in Investment Of America on February 13, 2024 and sell it today you would earn a total of  372.00  from holding Investment Of America or generate 7.2% return on investment over 90 days.

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

Britvic PLC ADR  vs.  Investment Of America

Britvic PLC ADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Britvic PLC ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Britvic PLC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Investment Of America

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investment Of America are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Investment may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Britvic PLC and Investment

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

The idea behind Britvic PLC ADR and Investment Of America 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.