Correlation Between Admiral Group and Siit Intermediate

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

By analyzing existing cross correlation between Admiral Group PLC and Siit Intermediate Duration, you can compare the effects of market volatilities on Admiral Group and Siit Intermediate 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 Admiral Group with a short position of Siit Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Admiral Group and Siit Intermediate.

Diversification Opportunities for Admiral Group and Siit Intermediate

0.9

Correlation Coefficient

Admiral Group  Siit Intermediate

Almost no diversification

The 3 months correlation between Admiral and Siit is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Admiral Group PLC and Siit Intermediate Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Intermediate and Admiral Group 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 Admiral Group PLC are associated (or correlated) with Siit Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Intermediate has no effect on the direction of Admiral Group i.e., Admiral Group and Siit Intermediate go up and down completely randomly.

Pair Corralation between Admiral Group and Siit Intermediate

Assuming the 90 days horizon Admiral Group PLC is expected to under-perform the Siit Intermediate. In addition to that, Admiral Group is 4.67 times more volatile than Siit Intermediate Duration. It trades about -0.12 of its total potential returns per unit of risk. Siit Intermediate Duration is currently generating about -0.04 per unit of volatility. If you would invest  900.00  in Siit Intermediate Duration on September 4, 2024 and sell it today you would lose (7.00) from holding Siit Intermediate Duration or give up 0.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Admiral Group PLC  vs.  Siit Intermediate Duration

Admiral Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Admiral Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Siit Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siit Intermediate Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Siit Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Admiral Group and Siit Intermediate

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

The idea behind Admiral Group PLC and Siit Intermediate Duration 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.