Correlation Between Total Produce and Severn Trent

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

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

Diversification Opportunities for Total Produce and Severn Trent

0.0

Correlation Coefficient

Total Produce  Severn Trent

Pay attention - limited upside

The 3 months correlation between Total and Severn is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Total Produce Plc and Severn Trent PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Severn Trent PLC and Total Produce 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 Total Produce Plc are associated (or correlated) with Severn Trent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Severn Trent PLC has no effect on the direction of Total Produce i.e., Total Produce and Severn Trent go up and down completely randomly.

Pair Corralation between Total Produce and Severn Trent

If you would invest  3,152  in Severn Trent PLC on January 25, 2024 and sell it today you would earn a total of  0.00  from holding Severn Trent PLC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Total Produce Plc  vs.  Severn Trent PLC

Total Produce Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Total Produce Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Total Produce is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Severn Trent PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Severn Trent PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Severn Trent is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Total Produce and Severn Trent

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

The idea behind Total Produce Plc and Severn Trent 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.