Correlation Between ZENERGY B and TRAVIS PERKINS

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

By analyzing existing cross correlation between ZENERGY B AB and TRAVIS PERKINS LS 1, you can compare the effects of market volatilities on ZENERGY B and TRAVIS PERKINS 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 ZENERGY B with a short position of TRAVIS PERKINS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZENERGY B and TRAVIS PERKINS.

Diversification Opportunities for ZENERGY B and TRAVIS PERKINS

0.61

Correlation Coefficient

ZENERGY B  TRAVIS PERKINS

Poor diversification

The 3 months correlation between ZENERGY and TRAVIS is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ZENERGY B AB and TRAVIS PERKINS LS 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVIS PERKINS LS and ZENERGY B 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 ZENERGY B AB are associated (or correlated) with TRAVIS PERKINS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVIS PERKINS LS has no effect on the direction of ZENERGY B i.e., ZENERGY B and TRAVIS PERKINS go up and down completely randomly.

Pair Corralation between ZENERGY B and TRAVIS PERKINS

Assuming the 90 days horizon ZENERGY B AB is expected to under-perform the TRAVIS PERKINS. In addition to that, ZENERGY B is 2.8 times more volatile than TRAVIS PERKINS LS 1. It trades about -0.13 of its total potential returns per unit of risk. TRAVIS PERKINS LS 1 is currently generating about -0.22 per unit of volatility. If you would invest  1,094  in TRAVIS PERKINS LS 1 on September 22, 2024 and sell it today you would lose (259.00) from holding TRAVIS PERKINS LS 1 or give up 23.67% of portfolio value over 90 days.

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

ZENERGY B AB  vs.  TRAVIS PERKINS LS 1

ZENERGY B AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZENERGY B AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TRAVIS PERKINS LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRAVIS PERKINS LS 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ZENERGY B and TRAVIS PERKINS

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

The idea behind ZENERGY B AB and TRAVIS PERKINS LS 1 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.